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Tesla Model S Demand in China is Huge
- Thread starter sleepyhead
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America's greatest export is its Pop Culture and products associated with it.
I recall articles about Levi's jeans selling for exorbitant prices in China. Other stories of Chinese buying huge quantities of expensive California wines. I also remember an article about GM selling more cars in China than in the USA just a couple years ago.
I believe Tesla will sell very well in China. The big questions I have are:
When will this be realized, how long until the Chinese version is ready to ship?
Will the Gov't play ball and will they help protect Tesla's IP?
Any insight into these questions?
I recall articles about Levi's jeans selling for exorbitant prices in China. Other stories of Chinese buying huge quantities of expensive California wines. I also remember an article about GM selling more cars in China than in the USA just a couple years ago.
I believe Tesla will sell very well in China. The big questions I have are:
When will this be realized, how long until the Chinese version is ready to ship?
Will the Gov't play ball and will they help protect Tesla's IP?
Any insight into these questions?
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NigelM
Recovering Member
Depending on how long the article is it may hit the character per post limit; but sleepyhead is welcome to post here or use the blog feature.
Sorry guys. I don't have much time right now to think about this.
I am still trying to figure out why Kevin wouldn't post it. I will have to go back and re-read it and try to figure out why and make any changes if deemed necessary. I don't see anything wrong with it though.
For those who have read it, could you please give me some feedback? You can PM me if you don't want to post in here. Thanks.
I am still trying to figure out why Kevin wouldn't post it. I will have to go back and re-read it and try to figure out why and make any changes if deemed necessary. I don't see anything wrong with it though.
For those who have read it, could you please give me some feedback? You can PM me if you don't want to post in here. Thanks.
StapleGun
Member
Welcome to the club NStar! Great first post. Do you know if luxury tax is included in the ~$164k figure?
Thanks. I'm fairly positive all taxes areincluded. Elon has clearly said in Q2 13 earnings call that TESLAis extremely transparent about the pricing regardless of country/regionand will not try to charge huge mark-up like other manufacturers. Theprice in China will just be the U.S. price + logistics + import taxes + maybe a3% allowable for exchange rate movements + some overhead. This is also prettymuch what the general manager of China said in one of the news reports I read.
All ofthese extra items are small with the exception of the taxes (import tariff,value-added tax/consumption tax), which are actually very steep. I have notfigured out exactly how the taxes are calculated. On some websites the importtariff is listed as 25% and value-added tax is 17% in general. One another newswebsite I see an attempt to estimate the taxes which appeared to be directlyfrom Tesla China for model S. There the tariff is said to be either 34.2% or37.6% depending on engine size, and the consumption tax is either 3% or 8%again depending on engine size. Because Model S does not have an ICE engineit’s not clear which tax rates should be applied. But it should be safe toassume 40%~45% for all taxes included. $163K /(1+45%) = $112.4K, which seems tobe a reasonable estimate for the price of a top-configured Model S plus theother small items.
Greetings!
Here are a couple of thoughts to share. Alternative views and discussion are welcome.
* I don't think that having a personal chauffeur for the Chinese luxury auto-market is a deal breaker for Tesla in the near future. I am pretty sure that there will be sufficient demand for five thousand vehicles (current projections for sales in China) without the requirement for super-smooth suspension for back seats. I can even speculate with high degree of confidence that even 50-thousand vehicles would not be a problem either. In 2012 for example, Mercedes-Benz "posted a new sales record in China (incl. Hong Kong) (196,211 u., +1.5%)." (see Mercedes-Benz posts new sales record in 2012 | Daimler > Company > News).
Also, of those top 2% wealthy upper class, we should bear in mind that there is repeat business. That's brand loyalty in action. In case of Tesla, such repeat demand can be quite meaningful.
* Some wealthy people don't mind to flash various status symbols once in a while. However, practically all wealthy people are attracted to quality and privacy.
Model S is a luxury sedan of excellent quality. Unlike ICE, Model S can be charged at home, private garage or at Supercharging stations. In fact, for battery replacement you don't even need to get out of the vehicle. This may turn out to be one of the most appealing convenience features of Model S and other cars from Tesla.
* Chinese authorities may demand Tesla to start a joint venture with the local company in order to share its technology. In this case, the assembly plant in the Netherlands may actually play an interesting role.
Earlier we wondered why Tesla would not open a full scale factory in Europe. If my logic is right, the assembly plant in the Netherlands is only a precursor of negotiations for China factories. When the time comes to deal with the Chinese government, Tesla would propose to follow the existing business model such as an assembly plant just like in Europe. This way Tesla complies with the Chinese government's demands for a joint venture for local production. However, in reality Tesla would still be able to safeguard its technology since the key know-how remains on the US soil. That says a lot about how shrewd the management at Tesla is!.. ;-)
Here are a couple of thoughts to share. Alternative views and discussion are welcome.
* I don't think that having a personal chauffeur for the Chinese luxury auto-market is a deal breaker for Tesla in the near future. I am pretty sure that there will be sufficient demand for five thousand vehicles (current projections for sales in China) without the requirement for super-smooth suspension for back seats. I can even speculate with high degree of confidence that even 50-thousand vehicles would not be a problem either. In 2012 for example, Mercedes-Benz "posted a new sales record in China (incl. Hong Kong) (196,211 u., +1.5%)." (see Mercedes-Benz posts new sales record in 2012 | Daimler > Company > News).
Also, of those top 2% wealthy upper class, we should bear in mind that there is repeat business. That's brand loyalty in action. In case of Tesla, such repeat demand can be quite meaningful.
* Some wealthy people don't mind to flash various status symbols once in a while. However, practically all wealthy people are attracted to quality and privacy.
Model S is a luxury sedan of excellent quality. Unlike ICE, Model S can be charged at home, private garage or at Supercharging stations. In fact, for battery replacement you don't even need to get out of the vehicle. This may turn out to be one of the most appealing convenience features of Model S and other cars from Tesla.
* Chinese authorities may demand Tesla to start a joint venture with the local company in order to share its technology. In this case, the assembly plant in the Netherlands may actually play an interesting role.
Earlier we wondered why Tesla would not open a full scale factory in Europe. If my logic is right, the assembly plant in the Netherlands is only a precursor of negotiations for China factories. When the time comes to deal with the Chinese government, Tesla would propose to follow the existing business model such as an assembly plant just like in Europe. This way Tesla complies with the Chinese government's demands for a joint venture for local production. However, in reality Tesla would still be able to safeguard its technology since the key know-how remains on the US soil. That says a lot about how shrewd the management at Tesla is!.. ;-)
The Google translates one sentence perfectly well.
[FONT=微]Vehicle design too ****ing beautiful.[/FONT]
Long live Tesla
[FONT=微]Vehicle design too ****ing beautiful.[/FONT]
Long live Tesla
Thought it was a good read, thanks for taking the time to post it. For me it did feel a bit like preaching to the choir just b/c I also feel demand will be huge in China. Conversation with a Tesla store rep doesn't really add/provide solid data and numbers (which nobody really has at this point) so I can take it for what it's worth. If I remember correctly you do have disclaimers but that you're confident he/she knows what they're talking about. One question that comes to mind is how much info do Tesla store reps really have? I doubt that they have access to reservation numbers, etc unless maybe if they're higher ups (managers?). But even then why would they need that info? They just need enough info to educate people about the cars and help them make reservations.
Maybe I'm too used to Apple and it's style of super secrecy where you don't even know what the guy in the building next to you is working on
Thought it was a good read, thanks for taking the time to post it. For me it did feel a bit like preaching to the choir just b/c I also feel demand will be huge in China. Conversation with a Tesla store rep doesn't really add/provide solid data and numbers (which nobody really has at this point) so I can take it for what it's worth. If I remember correctly you do have disclaimers but that you're confident he/she knows what they're talking about. One question that comes to mind is how much info do Tesla store reps really have? I doubt that they have access to reservation numbers, etc unless maybe if they're higher ups (managers?). But even then why would they need that info? They just need enough info to educate people about the cars and help them make reservations.
Maybe I'm too used to Apple and it's style of super secrecy where you don't even know what the guy in the building next to you is working on
Even though I know that the demand from China will be huge, I am wondering how much that employee actually knew. Why would he know that information. If it is inside information then he wouldn't be able to trade TSLA on it, but I am pretty sure that Tesla wouldn't put a store employee on the blacklist.
Maybe when he said there is a "waiting list" he was referring to the reservations that are being taken. I am now starting to have some doubts because of the things some people wrote.
One guy wrote in this thread that there are 200 reservations made in China. I find that number very hard to believe, I would have expected a lot higher number. Quite frankly, I would be extremely disappointed if only 200 people signed up after 3 months. It contradicts what the employee was saying. I am thinking that number is a lot higher, but maybe Tesla purposely avoided any advertising to prevent demand from going up too fast (sounds kind of crazy when you think about it, but could be true).
I don't know what to think anymore about this whole situation. One thing I do know for sure is that demand in China will in fact be huge. I have no doubts about this in my mind.
I wrote in the article what the employee told me, but only I was there so maybe I misinterpreted the words. In which case the person reading my article would obviously misinterpret the words as well. I am going to have to put some thought into this.
You guys can find the gist of the article on the front page of this thread. That is what the employee told me and you can interpret his words however you like.
Agree. I guess the question is is demand huge now or will it be huge in a couple of months? I just don't know how fast the China market will catch on. That's why although the 200 number would be disappointing, I wouldn't rule it out. I would just hope that that number will grow exponentially.
Hi Sleepy, I’m not entirely sure either about the 200+ reservation number I found on that web page, but I really have no reason to doubt it.
I found out the guy I called a couple of days ago (Mr. Shen Peng) is actually a sales director of Tesla China. Below is his sina weibo page (twitter-like service in China), where you can see his email. http://www.weibo.com/px11
[Moderator note: cell phone number removed here, we try to avoid publicizing cell numbers so folks don't get swamped]
When I talked to him he refused to tell me the number of reservations made in the Beijing store, but he did say if I made the reservation right now I would get the car same time as the guy who made the first reservation. I think you mentioned before you have some Chinese friends. One thing you can do is to ask your friends to call this guy to confirm. Then we can try to guesstimate how much the first volume shipment to China will be. BTW I think the Beijing Store started accepting reservation at late August so it’s not even two months yet.
Also I want to do more research on the number of premium/luxury cars sold in China; I know it’s a very large number even on monthly basis, so I totally agree with you on the potential China demand for ModelS next year. What I’m not sure right now is if the China reservation is already big enough to have some impact in Q3 ER. So far I feel it might not be the case; maybe the 15K demand for next year for Tesla is a projection based on sales data from other imported premium/luxury cars rather than the actual China reservation#. Anyway we’ll find out more.
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Could this be a hint from Elon on state of reservations in Asia?
Short-Term TSLA Price Movements - Page 1080
Short-Term TSLA Price Movements - Page 1080
Last edited:
NigelM
Recovering Member
Mod Note: Folks, please don't just post a link without comment or explanation, it doesn't add to the discussion.
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