By on February 18, 2015

tesla-china-charger-620x350

Tesla’s Apple aspirations may have its detractors, but the automaker’s ongoing problems in China are likely to do more harm than said detractors.

Forbes reports Tesla’s China operations are closing 2014 on a down note, having brought over 444 units in December compared to 747 in November. Further, 45 percent of all Teslas have yet to be registered with local authorities, and therefore, have yet to legally hit the road. The country also accounted for 15 percent of the automaker’s global sales in 2014.

The issue is the brand’s cachet with Chinese consumers, who bought the Model S because of its trendiness, not because it’s better for the environment. Thus, Tesla’s popularity will last as long as the next trendy vehicle from a competing luxury automaker.

CEO Elon Musk’s current solution? Fire or demote those “not on a clear path to positive long-term cash flow.” The publication says this approach will only “erode his power base and credibility,” aspects he needs to maintain if he intends to keep to the path of long-term sustainable growth and stability.

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38 Comments on “Tesla Hitting Sales Roadblock In China...”


  • avatar

    Tesla’s are basically like any other well-designed cars, except they are propelled alternatively. Apart from the trendiness of electric propulsion (generally heavily subsidized which is a risk factor) and sleek design, Tesla may need new sales arguments to keep attracting new customers, not only in China.

    • 0 avatar
      jdogma

      “Tesla’s are basically like any other well-designed cars” Wrong. Teslas are different from any other well designed car because in any other car, you can go wherever you want and refuel in a few minutes. With a Tesla, you are on a 140 mile leash. It simply does not take the place of any other car. Who has a car that they have not driven more than 140 miles from home? If the Tesla owner is lucky enough to live near a charging station, and he just happens to want to take a trip in that direction, he is still inconvenienced by a long wait to continue his trip. A Tesla only makes sense as a second car luxury runabout.

      • 0 avatar
        Whatnext

        That’s not true.

        While it doesn’t make sense to have a Model S as your only car, it makes perfect sense for most commuters as a second car. Everybody in my office could easily accomplish their daily routine with a Tesla.

        • 0 avatar
          ReSa

          Depends on where you live of course. Yet a friend of mine owns a Tesla here in the Netherlands and drove 35K miles with it last year. The only time he was inconvenienced by its range was on a trip to Italy, where there are almost no fast charging stations.

          So yeah, the great majority of people would never suffer.

    • 0 avatar
      TeslaS

      The problem for China is that Tesla is not really a luxury car. Quality of interior materials is quite a bit lower than Germans and many features are still missing. It is well known rich Chinese often hire a driver but it was apparently a surprise to Tesla that Chinese luxury car owner is interested in *rear* seat comfort. Only recently Model S got upgraded ‘executive’ rear seats. Few months ago there was no even heated rear seats. How someone seated in the rear is supposed to control media system? There is no remote control, no rear climate controls. MS is more a performance/enthusiast/early adopter car rather than a real luxury car. BTW I own one so I know.

  • avatar
    SCE to AUX

    I’m not a fan of heavy-handed management threats, but it’s likely Tesla’s China staff made promises they aren’t keeping. Accountability is a virtue.

    • 0 avatar
      redav

      Heavy handed or not, it doesn’t seem like Tesla’s employees in China are able/interested in doing what’s best for Tesla. Is Musk handling it the right way? Probably not, but given the results and apparent causes, he’s probably right to replace them.

  • avatar
    mor2bz

    China is a pretty big place. Kinda hard to cover with charging stations.

    China is serious about electric cars and air pollution. However, no
    credits are to be issued for something not manufactured there. This is
    a distinct disadvantage for Tesla.

    • 0 avatar
      SunnyvaleCA

      China keeps building additional coal-fired electrical generation… and not exactly the cleanest burning coal generation at that. If you put CARB emissions on a Prius I’d bet it would pollute less of just about anything you care to measure compared to a Tesla run by Chinese electricity.

      • 0 avatar
        Master Baiter

        “…and not exactly the cleanest burning coal generation at that…”

        Depends on how you define clean. China’s soot problem is not caused by CO2, which is now considered “dirty” by regulators trying to combat “climate change.”

      • 0 avatar
        redav

        China is building all the power generation they can, including renewables. Granted, much of it is due their their sheer size, but I believe they are adding renewable energy capacity at a faster pace than the US.

  • avatar
    NN

    Tesla’s problem in China is not image but distribution. They have only a handful of dealers/service stations and charging stations in a massive nation. They insist on owning their own dealer/distribution network much as they do in the US, and the same battles they are fighting with US states are being fought with local bureaucrats in China, along with the extra baggage of Tesla being a “foreign” enterprise there. I just returned from 10 days in China and saw only one Tesla in mainland China (in Shanghai). In Hong Kong, on the other hand, the Model S is quite popular–I saw over 10 of them in about a day and a half there. That is a positive sign…long term, I’m confident Tesla will succeed in China.

    It’s cliche, but Apple trended a similar path in China. Older versions of the iPhone that were launched were not as successful, Chinese customers not willing to pay a premium when local knockoffs were available cheaply, and local brands such as Xiaomi, etc. stole the limelight. Apple was “struggling” in China. Look at ’em now…the iPhone 6 is huge there, highly desirable, I saw more amongst the people I met with there than I’ve seen here in the states amongst my peers. Tesla will awaken in China but maybe not until the Model X is widely available there…maybe 2 years. By then they’ll have enough dealers in enough places, and they’ll probably be assembling them locally also not long after–an immediate 35% price cut.

    • 0 avatar
      Otterpops

      Every foreign auto manufacturer with a major presence in China has a joint venture with a Chinese partner. Every damn one.

      • 0 avatar
        DeadWeight

        Not just automakers, but any manufacturer, supplier, etc.

        It’s required by Chinese law to have a “JV” partner to have full access to Chinese production and/or consumers.

        How else would Chinese firms have access to and/or steal decades worth of proprietary intellectual technology and accumulated knowledge in a short period of time?

        But western firms, being short-term profit maximizers, eager for cheap labor, loose environmental & labor regulations, lured by other subsidies, and most importantly, wanting access to hundreds of millions of new customers under “one roof,” (even if they’re giving away the Colonel’s secret recipe), just can’t help themselves.

  • avatar

    Concerns such as global warming are widely held in the West, but not so much in other parts of the world. The fact that a Tesla is an electric car probably means far less than its styling and luxury appointments in a place like China.

  • avatar

    “The issue is the brand’s cache with Chinese consumers, who bought the Model S because of its trendiness, not because it’s better for the environment. ”

    I live on and off in Shanghai China. The major problem I see no one mentioning is the CHARGING ISSUE. The streets are so tight, the parking so poor and the access to outlets so difficult that an electric car makes absolutely no sense on their streets right now. The average RICH Chinese person lives in a luxury apartment building that typically has no basement for parking cars.

    so where would they manage to charge these things?

    CHINA’s government needs to invest in electric vehicles with the focus on eliminating gasoline powered vehicles from their roads in 20 years (or less). They need to make Electric charging stations ubiquitous (as does America).

    Considering the high level of air pollution and toxicity, I’m sure they could get their citizens behind this.

    • 0 avatar
      Master Baiter

      “CHINA’s government needs to invest in electric vehicles with the focus on eliminating gasoline powered vehicles from their roads in 20 years (or less).”

      Why? We’ve been using gas cars here and the air is just fine. China’s thick air has nothing to do with modern, gasoline powered cars.

      • 0 avatar

        Have you ever lived there???

        The air and water are heavily polluted. You can see genetic mutations and abnormalities in some of the children and adults (example, thumbs being the wrong size)

        When I get off the airplane, the first thing I notice is I smell BURNING. The worst coal and ash you could imagine. I get sick immediately and have to drink hot bottled fluids for a week to adjust. Sore throat like you wouldn’t believe.

        While I DO NOT BELIEVE IN GLOBAL WARMING and I am certain climate change is a natural process…

        I will concede that AIR POLLUTION and WATER POLLUTION is something that we should work to reduce as much as possible.

        I want everyone to have Priuses and Teslas.

        Except me.

        • 0 avatar
          S2k Chris

          You misunderstand. Modern, clean cars are not causing China’s pollution problems, factories and other environmental blights are. Replacing an S550 with a Model S does nothing to fix the pollution-belching factories and powerplants, aside from giving the bureacrats Insane Mode.

          • 0 avatar
            28-Cars-Later

            “aside from giving the bureaucrats Insane Mode”

            Wait is that still R2, R2, L1, R2, LEFT, DOWN, RIGHT, UP, LEFT, DOWN, RIGHT, UP?

          • 0 avatar
            S2k Chris

            “Wait is that still R2, R2, L1, R2, LEFT, DOWN, RIGHT, UP, LEFT, DOWN, RIGHT, UP?”

            My theory is that you can tell a generation by the cheat codes they remember. I know the Konami code, but the one I always used was A, B, A, C, A, B, B.

          • 0 avatar
            davefromcalgary

            B A B A Up Down B A Left Right B A Start

            or

            up up down down left right left right b a b a select start

            I’m a 1985 baby

            Could never beat Contra on 3 lives, but 30 was a breeze.
            TMNT 2 the Arcade Game, 10 lives vs 3. Went a long way.

          • 0 avatar
            28-Cars-Later

            Wow, I like how you guys whip out NES codes I was at least thinking PS2.

            @dave

            The only one I can remember now was Turtles in Time but that was SNES of course.

            Contra was m’eh to me in the arcade, I preferred After Burner.

          • 0 avatar
            davefromcalgary

            28

            I went directly from NES to PC gaming when I first got chance to play Command and Conquer Red Alert on a Windows 95 Pentium 133. I got bit by the real time strategy bug really bad, (even thought I suck at them) and haven’t wanted for a console ever since.

          • 0 avatar
            28-Cars-Later

            I was into the Lucasfilm games around the time, specifically the flight sims X-Wing/Tie and later the FPS Dark Forces although I didn’t miss out on SNES. I did tune out of consoles till PS2 though. I had a friend who was very much into RT strategy/war games like C&C, Starcraft, and [real] Warcraft. They annoyed me too much, so I said eff that noise.

            You can actually play all of those now on emulators BTW.

          • 0 avatar
            Master Baiter

            Reading comprehension was never BTR’s strong suit.

          • 0 avatar

            Takeing ICE vehicles off China’s roads will help somewhat because it could cut down on NO2 during the hot days.

            I also believe China could go mostly Nuclear and it would make electricity cheaper and easier to manage.

            After all – they lack America’s political lack-of-willpower and they have the money.

            MASTER BAITER:

            You don’t have the intelligence to share my vision. I’ll think of you when I’m cashing my internet checks.

    • 0 avatar
      Otterpops

      Luxury apartment buildings mostly have parking. Apparently a lot of them don’t have RESERVED parking (which would be pretty important to anyone wanting to set up a charger in the garage) because I saw my neighbor’s Lambo parked all over the place.

      But yeah, home charging would be a bigger issue in China than the US.

      China is actually SWARMING with EVs. They’re scooters. People either bring the scooter up to their apartment in the elevator, or take the battery out and bring that home to plug in.

  • avatar
    CarnotCycle

    I know it’s not China proper per se, but I imagine Tesla Model S’s could sell well in Hong Kong. Trendy, western, high-tech, and everything is within twenty miles of where one needs to go. Plus, Hong Kong also has money – far more per capita than anywhere on the mainland, and much more Western-style consumer habits.

    • 0 avatar

      TESLA will do best in countries that are in the process of developing their electrical infrastructure since all their equipment will be brand new. I don’t force TESLA Supercharging stalls.

      More likely these countries will rely on ubiquitous high-power electric ports subsidized by the government.

      The government could simply build the tax into vehicle registration fees.

      • 0 avatar
        Big Al from Oz

        @BTR,
        The problem remains who’s paying for these charging stations.

        Tesla wants to monopolise it’s product, similar to how Sony went with many of it’s products, then charge a premium.

        If Tesla keeps on heading down it’s current path it will be like Sony. I would not own Tesla shares like you do looking at how Tesla is operating.

        Also, many countries, even China don’t have the money to invest in charge stations. If it was viable, then the private sector would already be on top of it.

        Gas Stations don’t need to be subsidise and never were.

  • avatar
    Pch101

    “The issue is the brand’s cache”

    It’s “cachet”, with a “t”.

    cache = storage

    cachet = prestige

  • avatar
    Russycle

    “The issue is the brand’s cache with Chinese consumers, who bought the Model S because of its trendiness, not because it’s better for the environment.”

    I’m not convinced “it’s better for the environment” is driving the decision of most Tesla buyers. I’m sure it’s a factor, but not as important as you’re implying. I’m basing this on a quick non-scientific study involving google and Tesla forums

  • avatar
    TrailerTrash

    JesusHchrist…enough of the Tesla news!
    Tesla must get 20 percent of all TTAC headlines.
    For such a low volume car, it sure gets a lot of writer ink.

  • avatar
    Whatnext

    I don’t get the undercurrent of dislike for Tesla here. It’s not like anyone is forcing you to buy one. However, it is one of the most signficant automobiles of the last 50 years and therefore deserving of ink. The early auto industry with flled with innovators and dreamers, why do so many posters sound like they want to piss in Elon Musk’s Wheaties?

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