Though Tesla is now just delivering new vehicles to China, CEO Elon Musk predicts his company will build luxury electric vehicles in the burgeoning market within the next three to four years.
Bloomberg reports the move to localized production would allow the automaker to sell their wares while also avoiding China’s 25 percent import tariff. Right now, a new Model S retails for $118,000 in Beijing due to VAT, shipping and import duties, compared to $71,000 in Los Angeles. Musk hopes to qualify the Model S for local subsidies to help offset costs in much the same way the luxury EV sedan receives federal tax credits back in the United States.
In addition, Tesla is expanding its Supercharger network to China, with Beijing and Shanghai among the first cities to join. No word yet as to how much the automaker is investing in the expansion.
A number of challenges lay ahead for Tesla’s move into the market, including slow adoption of electric vehicles among Chinese consumers and lack of a robust infrastructure, as well the loss of China general manager of operations Kingston Chang prior to the automaker’s entry. That said, Tesla plans to increase overall global sales 56 percent this year, moving 35,000 EVs out of the showroom in so doing.