Photo: Elon Musk, the CEO of Tesla Motors tries out Model S. Photo: images.baidu.com
In the August of 2011 when I was in California for a business trip, I had planned to visit the Tesla Motors, although the request was finally turned down by the hi-tech company. It was not completely unexpected though, considering all the resources of the company at the time were focused on preparing listing of its Model S.
Responding to an interview request from a Chinese publication, the company said in an e-mail, “Tesla values the China market. However, if the Chinese government would set bars for imported electric cars and if it would unilaterally subsidize domestic brands, we are just concerned. And we also feel anxious about if intellectual property rights could be fully protected in China. So, we’re not clear whether or not Tesla would enter the market.”
One year later, in the August of 2012, George Blankenship, vice president of Tesla in charge of global sales and user experiences, came to Beijing to decide about the site for its first exhibition hall in mainland China (there is one already in Hong Kong). In an interview with PingWest at the GigaOM Roadmap 2012 meeting in San Francisco, Blankenship confirmed that Tesla had decided to enter China and open an experience store in Beijing.
So, in just one year, Tesla turned from indecision to action. What were the reasons behind the change of attitude?
Although the new energy vehicle industry had apparently gone too far in 2010, nowadays, it has finally returned to reason in China. All eligible producers have got listed, which include BYD E6, JAC Motors, LIFAN 620EV and Roewe E50. Based on the current status, it would be hard for China to develop a model that can match Tesla Model S. So, Tesla would not face any real competition in the field in China for a long time.
However, the traditional luxury car market may pose a threat. In the West, where green industries are naturally valued, the first batch of Tesla buyers view the all-electric car differently from traditional petrol-powered ones. However, in China, consumers tend to care less. So, Tesla would have to fit into the segment of all imported luxury cars. The good news is Model S would definitely not lose the battle considering its record-breaking distance per charge and high-end specifications.
Meanwhile, big cities in China are busy with phasing out new limitations for car buying. Petrol and parking costs are surging, and consumers are changing their original plans. They may initially just want to buy a car as a means of transport and now, they want something really good. The market for luxury cars is therefore booming, which also brings good news to Tesla.
Charging may be a problem. In China, it’s not a technical problem but a public relations one that must be solved with the Chinese government. More specifically, it is a problem of how to cooperate with the State Grid (国家电网). Tesla Model S is supposed to be compatible with China’s 16A 220v civil use electricity and the standards for fast charging. If it wants to install chargers for its customers at home, it also needs to gain support from state-owned big companies, like the State Grid, Southern Power Grid (南方电网), and Potevio (普天新能源).
Another question is when exactly Tesla can open a real 4S store. An experience store could only be useful for brand promotion and preparation for future sales efforts. How long will the trial period last? No one knows. But it is believed Tesla would not let its wealthy Chinese fans wait too long.
And the last question is whether or not the Chinese government would extend subsidies to imported new energy cars in the future. Although there is no sign of it at present, in the long run, if electric cars could finally gain a footing, the government should really give it a serious thought. It depends on what our government really means to do—to promote energy conservation and emission reduction or just to help out weak state-owned businesses.
All in all, it’s just natural for Tesla to come to China. There is no real competition but a myriad of constraints. How far could Tesla finally get? Let’s sit back and see what happens.
The piece is translated from a blog article by Guo Er on EVhui.com.