Why not short Tesla Motors
Is Tesla Motors will build a factory in China.
Tesla Motors TSLA NASDAQ was one of the best performing stocks last year - more than quadrupling in value - and the momentum is expected to continue in 2014 as the electric car manufacturer among the world's largest auto market but unlike traditional manufacturers selling in China today, Tesla will isn t load up customers the California-based company shocked many on Wall Street this week after announcing the prices on the Chinese market, which is significantly lower the industry standard in addition to this, Tesla CEO Elon Musk said that Tesla plans to open a factory in China, but more on that in a minute.
First, to dissect why Tesla pricing strategy in Asia is another prescient move for the company.
The road less traveled Tesla plans to sell its 85 kilowatt battery equipped S model for 734,000 yuan, which breaks down to about 121.370 US dollars, reflecting that Tesla will pay Chinese taxes, fees and transportation costs As a comparison, other luxury carmakers like BMW and Audi often charge marked price of vehicles sold in China Musk was quick to report in a blog post this week writing.
We know our competitors will try to convince Chinese consumers that our label relatively low price means that the S is a smaller car, when the real reason for their car costs more is that they double the profit per car China compared to the US or Europe.
Tesla takes the high road to customer satisfaction, and must pay for the EV manufacturer Yet some critics say that a point price of 734,000 yuan is much higher than electric cars made in China, which in the selling highest range for about 200,000 yuan after government subsidies, according to Street Journal more Wall, because his aren cars made in China, sedan Tesla model S don t qualify for government incentives like other electric vehicles in the region.
But this is hardly a setback for Tesla After all, the S model doesn t want to compete with other cars without gas in itself instead, it aims to take market share of global luxury car manufacturers such as BMW, which the 5 Series GT has a price starting 738000, China.
The construction of a factory in China Offering a fair price for its cars Tesla plays in the desire to develop sales in the greater China region While Tesla won your hand officially on S model cars to Chinese buyers up in March, Musk is optimistic about the expansion of the company there in fact, he believes that Tesla could see much, if not more, sales in China than it does in the US market which is encouraging, especially given Musk balance to be accurate in its expectations.
Musk is so confident this pricing strategy succeed in the region, in fact, he plans to open a local factory in China to help meet the demand for production in a recent interview with Bloomberg, Musk said there's no doubt Tesla will have a China factory, although he didn t specify when this would happen.
While Tesla claims to be an American company that manufactures its zero-emission vehicles in the United States, there are significant cost advantages in operating factories overseas Having a factory in China allow Tesla to deliver its Model S cars faster in the region, while reducing the cost of import duties with import taxes by adding 25 to the cost, establishing a factory in China could be a strategy sustainable in the long term for the company.
Fool contributor Tamara Rutter owns shares of Tesla Motors The Motley Fool recommends Tesla Motors The Motley Fool owns shares of Tesla Motors Try our free Foolish newsletter services for 30 days We Fools may not all hold the same opinions, but we all believe that given a wide range of ideas makes us better investors the Motley Fool has a disclosure policy.
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