Tesla’s pricing strategy has just been announced which has seems to be overly fair for the Chinese market, putting the price on par with the USA but due to import taxes the price gets bumped a little higher than the US. But there remains several hefty road blocks in the way before Tesla can make China a major market.
Firstly, there is a clear lack of public charging facilities in China and information on where the facilities are is exceptionally low on the ground, there doesn’t seem to be any publicly available maps showing where to find charging facilities. Secondly, urban Chinese are largely apartment dwelling folks which leads to a lack of convenient home charging facilities.
See the above picture of a gentlemen near me who lives in an apartment valued at somewhere in the 2 million plus RMB range and owns a small lead acid electric car which was likely made at one of the dozens of EV brands in the Shandong area for around 40,000RMB – it cant have license plates because it wasn’t from a factory that has a license to make EV’s, the police usually don’t bother such EV drivers in the suburbs and tier 3 or 4 cities unless they attempt to go into the city center, but this old chap uses it just to pick up groceries and take his grandson around the sprawling closed complex in which he lives as a retiree looking after his rowdy grandson whilst the parents are at work. How does the old man charge his vehicle? He hangs a wire out of his 20th floor apartment window all the way down to the lead acid batteries in the back of his fiber glass automobile.
Tesla offers a home charging kit for its Model S, which offers an impressive 58 miles per hour of charge which is more than enough for most users however it again relies on the user having an electrical hook up in his parking lot or better yet an independent garage – not so common in China’s urban environment. Of course, Tesla are looking to snare those luxury consumers who may have their own independent house in China or at least a duplex garage. And for those that wish to dangle cables out of their 20th floor window, Tesla offers a universal plug charger offering 32 miles per hour of charge.
Tesla’s plan to bring its supercharger network to China has gained headlines in the past few days, but where such a supercharger network will be is still a mystery. The US version runs east-west, but the Chinese version will likely run north-south to link major cities such as Beijing and Shanghai over a 1200km distance, but at the same time there is also a highly efficient high speed railway service that runs at 300 km/h (186 mph), and 250 km/h (155 mph) which takes just 4 hours and 48 minutes. You also have a passenger jet set service from all major and minor Chinese carriers that run dozens of flights per day each way for just a few hundred RMB that takes over 2 hours. Would you really want to drive 12 hours each way with such efficient mass public transport offerings? Tesla’s charging network would be better scattered across the nation or around major tourist hubs in the Shanghai-Zhejiang-Jiangsu area as well as in city centers and on toll paying highways.
It also appears that Chinese consumers are focused entirely on branding rather than green and sports credentials, after all a person who can afford a 123,000USD car is not likely to be bothered by the cost of filling it up. A BMW 7-series, Audi A8 or Jaguar XJ are all lumped in the same price bracket as the Tesla Model S, but also carry decades of brand awareness with them. Tesla’s best hope is to introduce an Apple style brand allure to snag Chinese customers into the brand before going mass market with cars priced in the 300,000RMB range in the near future.
One point that many people have raised is that Tesla’s Model S is not eligible for any Chinese government new energy vehicle subsidies as an imported vehicle, but that doesn’t matter as the Model S is aimed at the top 5% earners in China whilst the subsidies are aimed at getting the remaining 95% of the car buying public into EV’s and away from gasoline.
A Chinese factory has been talked about over the past couple of days but no specifics have been revealed, not to have a factory in the world’s largest automotive market seems like a big mistake but Tesla are not yet at the stage where they can offer a vehicle fit for the masses. A future 30,000USD rivaling the BMW 3-Series and Volkswagen Jetta in size will likely bring Tesla the mass sales they wish, but that will only come with a wide range public charging network which puts convenience at the center of all operations. Right now within a 5km radius of my urban Chinese apartment there are five gas stations, one LPG gas station and one charging station that is used for public buses, if it was the other way around then EV’s would likely be a common sight. Convenience – or Fang Bian – is at the heart of every Chinese consumer, if it isn’t fang bian then it isn’t getting bought or sold. On the other hand, taking your traditional gasoline car for a service every three four months isn’t exactly fang bian, and lining up to get gasoline once per week isn’t fang bian either – charging up at home is highly convenient as long as the infrastructure is there to support it and currently it isn’t.
American friends tell me that the Model S is to American as what the Porsche Cayenne SUV is to China’s rich, it will be interesting to see if the same game plan can expand to China, especially as green vehicles which were a hit in the US mass market failed to make any sort of dent within China. Overall, it seems that Tesla has the opportunity to become a leader in the Chinese market but at the moment they are in neutral rather than drive. How the market reacts in the next 12 months will help us predict how the market will look in the next five to ten years, but the same chicken or the egg scenario is laid out in China as it is in the USA.