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Tesla International Expansion into Korea

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bh1783

Member
Apr 7, 2014
229
196
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#1
Looks like Tesla is going to be expanding into Korea pretty soon (based on their job postings)

https://chc.tbe.taleo.net/chc01/ats/careers/requisition.jsp?org=TESLA&cws=1&rid=29548

Korea has the potential to be one of Tesla's biggest markets. It's already the 5th largest market in the world for the Mercedes E Class and S Class
http://www.koreatimes.co.kr/www/news/biz/2014/10/123_147201.html

Also, it's in the top 5 markets for the Audi A8, Jaguar, and BMW 7 series. I think it's one of the top markets in the world for Maserati as well. BMW already sold over 100 i8's and the Bentley dealership in Seoul is the 2nd busiest in the world(after Dubai)

http://www.reuters.com/article/2015/03/09/southkorea-autos-luxury-idUSL4N0W510N20150309

Tesla should easily be able to move a couple thousand units per year in Korea alone.
Korea has:
$10/gallon gas
$10,000-$15,000 EV incentives for cars
100% fully deductible leases against income (that's why its one of the largest luxury car markets in the world)
small country so no range anxiety (50 million people, more than the entire US west coast in an area the size of Ohio)
large domestic battery producers Samsung SDI and LG Chem

I think fewer than 10 superchargers would cover the entire country since you can only drive in one direction (South!)
 
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#2
Dear lord @bh1783 - with the market characteristics you're describing, I agree with your assessment - Korea is going to be huge for Tesla. Sounds almost like another Norway :)

Do the other luxury makers mark up their cars in Korea significantly relative to pricing in the US or other markets? My understanding is that a Mercedes in China is on the order of 2x as expense as the US. I ask because if there is a similar dynamic in Korea, then that becomes another factor in why Tesla is going to be selling a lot of cars there - they price consistently around the world, and that's going to make a Model S cheap.
 
#3
adiggs said:
Dear lord @bh1783 - with the market characteristics you're describing, I agree with your assessment - Korea is going to be huge for Tesla. Sounds almost like another Norway :)

Do the other luxury makers mark up their cars in Korea significantly relative to pricing in the US or other markets? My understanding is that a Mercedes in China is on the order of 2x as expense as the US. I ask because if there is a similar dynamic in Korea, then that becomes another factor in why Tesla is going to be selling a lot of cars there - they price consistently around the world, and that's going to make a Model S cheap.
Click to expand...

Yeah for larger displacement vehicles it's about a 1.5x markup.
For example, a Hyundai Equus that sells for $68k in the US sells for $110k in Korea.
In the US, a Mercedes S600 sells for 166k while in Korea the same model is around 266k. So yeah about a 70-75% markup for vehicles that the Model S would compete against. Mercedes does sell an S350 though for 128k in Korea.
A single Tesla dealership in Seoul would probably move at least a 1000 units per year. The single Maserati dealership in Seoul sold 730 Ghibli's this past year.
 
#4
bh1783 said:
Yeah for larger displacement vehicles it's about a 1.5x markup.
For example, a Hyundai Equus that sells for $68k in the US sells for $110k in Korea.
In the US, a Mercedes S600 sells for 166k while in Korea the same model is around 266k. So yeah about a 70-75% markup for vehicles that the Model S would compete against. Mercedes does sell an S350 though for 128k in Korea.
A single Tesla dealership in Seoul would probably move at least a 1000 units per year. The single Maserati dealership in Seoul sold 730 Ghibli's this past year.
Click to expand...

Just don't mention the Panasonic cells.
 
#5
ItsNotAboutTheMoney said:
Just don't mention the Panasonic cells.
Click to expand...

Good point. IIRC, Tesla approved LG Chem as a supplier. Perhaps they could work out using LG Chem cells in vehicles destined for Korea. I wonder if that would have any tax or other regulatory advantage.

Psy_money.jpg
 
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#6
jhm said:
Good point. IIRC, Tesla approved LG Chem as a supplier. Perhaps they could work out using LG Chem cells in vehicles destined for Korea. I wonder if that would have any tax or other regulatory advantage.
Click to expand...

I think Samsung SDI is approved as well. I don't think there would be any tax or regulatory advantage. Korea already has a FTA agreement with the US, and Europe.

I think the main hold up in Korea is the dealership angle. Most imported cars are run through importers/dealer franchises in Korea. I believe it took Porsche almost ten years to open up a company store in Seoul. Using a dealer franchise in Korea would probably weaken Tesla's efforts to avoid dealerships in the states.
 
#7
bh1783 said:
I think Samsung SDI is approved as well. I don't think there would be any tax or regulatory advantage. Korea already has a FTA agreement with the US, and Europe.

I think the main hold up in Korea is the dealership angle. Most imported cars are run through importers/dealer franchises in Korea. I believe it took Porsche almost ten years to open up a company store in Seoul. Using a dealer franchise in Korea would probably weaken Tesla's efforts to avoid dealerships in the states.
Click to expand...

Ah, I think I confused Samsung SDI with LG Chem. Thanks.
 
#8
Interesting. I was wondering for a while, why Tesla has not rolled out in Korea faster. One other obvious element, which makes this market attractive is geography - the population is very dense, you only really need a few superchargers to cover the country, and people only really drive within the country. So range is not a concern.
One major concern, I guess, will be home charging in urban areas. Do people normally have dedicated parking spots?

Other markets with similar characteristics in terms of geography are Israel and Taiwan.
 
#9
In order to get incentives you have either be Korean Carmaker (GM is Daewoo), except for BMW who got qualified for subsidies thanks to its big R&D Base in Korea and the fact that large part of the car value comes from Korea (Battery), also BMW is most popular foreign Brand in Korea (maybe tied up with VW now though). BMW invests tons of money in Korea too, for example building a Massive 64 mio $ Dealership with indoor test track.
Also having a guy Direct Korea from Japan is very stupid idea for historical reasons imo
 
#10
svp said:
Interesting. I was wondering for a while, why Tesla has not rolled out in Korea faster. One other obvious element, which makes this market attractive is geography - the population is very dense, you only really need a few superchargers to cover the country, and people only really drive within the country. So range is not a concern.
One major concern, I guess, will be home charging in urban areas. Do people normally have dedicated parking spots?

Other markets with similar characteristics in terms of geography are Israel and Taiwan.
Click to expand...

It's impossible to drive outside of the country with the DMZ and North Korea on the border. Israel is also a really good candidate since politically, no one is ever driving outside of the country's borders. It makes sense in these countries where you can realistically only drive 2-3 hours at a stretch to have electric cars.

A vast majority of people live in apartment complexes with underground parking. Urban charging isn't an issue since almost no one parks their cars on the streets. All shopping malls, apartments, and office buildings utilize underground parking. BMW provides free charger installs for people that buy an i3.
Electric cars make sense in Korea since the majority of cars are parked indoors at all times.
IMG_0006.jpg
 
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#11
Looks like the mainstream media picked up this posting:
Is Korea the next big market for Tesla? - Fortune
Tesla's next big frontier could be South Korea - Business Insider


Update from a Korean newspaper:
Tesla eyes Korea in Asia push
Korea can be Tesla's 4th or 5th largest market. BMW sold 185 i8's @$185k each and recently ordered another 50. Despite it's size, Korea is the 5th or 6th largest luxury car market in the world (after the US, China, Germany, UK and maybe Japan). According to industry data, sales of luxury cars priced at 100 to 150 million won were 9,360 vehicles last year, while the figure for those priced over 150 million won was 5,616 vehicles, almost double of a year ago. The Korean luxury car market is the same size as Japan despite having 1/3 the population.

With EV incentives (10-15k per vehicle) I would estimate that Tesla could sell over 5,000 model S and an equivalent number of Model X's (Cayenne and Range Rovers are super popular in Korea). 10k units per year would make Korea one of Tesla's largest markets. BMW and Mercedes both move over 20k units per year in Korea.
 
#13
DrGuest said:

Tesla sees ‘great potential’ in S. Korea

ILSAN (Yonhap) — South Korea has “great potential” and is a market that it hopes to expand into in the future, an executive of Tesla Motors Inc. said Wednesday, stopping short of giving any specific business plans.

http://www.koreatimesus.com/tesla-sees-great-potential-in-s-korea/?utm_campaign=teslaweekly.com&utm_medium=email&utm_source=Tesla_Weekly_63
Click to expand...

Korea has the potential to be Tesla's 4th or 5th largest market.
 
#19
JRP3 said:
Plus the limited geography means greater sales density and easier supercharger coverage. Either Tesla knows something we don't or it was a fairly rare strategic blunder on their part.
Click to expand...

IIRC Korea had,until recently, quite an unfavourable legislative and regulatory environment. The one example that comes to mind is the ban on electric vehicles on highways, which stemmed from the assumption that all purely electric vehicles were golfcart-style mini vehicles that were not safe at highway speeds. Maybe Tesla were just waiting for some of those kinks to get worked out?
 
#20
Gerasimental said:
IIRC Korea had,until recently, quite an unfavourable legislative and regulatory environment. The one example that comes to mind is the ban on electric vehicles on highways, which stemmed from the assumption that all purely electric vehicles were golfcart-style mini vehicles that were not safe at highway speeds. Maybe Tesla were just waiting for some of those kinks to get worked out?
Click to expand...

thats even more reason to go to Korea.

yes, its was correct to go to China first, but Tesla chose many places that were not suitable. Didn't the story about the millionaire who planted 20 charging stations to get his car from Beijing to Guangdong E-Car Owner Builds Recharging Network from North China to South not seem clear enough to describe where the demand was, and where the demand was not.

Koreans drive significantly larger car than the Japanese, just compare sales rates for Sonata class cars in Korea vs Camry class cars in Japan.

Korea also has the advantage of cheap and easy to expand, 220V AC charging, all thats required is a RFID sticker to turn a power point into a charging point. EV-LINE Àü±âÂ÷ ÃæÀü ¼­ºñ½º

small country
ease to obtain 220V AC charging, especially for apartment residents (and Seoul is basically a spread-out apartment city, so North Korean guns find it more difficult to concentrate fire)
decent Chademo network (perhaps around 350 units)
only 1 SC station to go from Seoul to Busan, only a handful of stations needed to saturate the country
significant cultural tendency to benchmark vs China and Japan
 
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