Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Tesla: China Could Be Our Biggest Market

Tesla (NASDAQ: TSLA  ) won't begin deliveries in China until about the end of March. But as the company's first China delivery approaches, more details on its plans in the world's largest auto market are surfacing -- and the plans are looking aggressive.

Model S. Source: Tesla

Potential sales in China
While Tesla had originally said it planned to begin deliveries in either the first or second quarter of 2014, recent comments from Tesla CEO Elon Musk to Bloomberg suggest that the end of March may be locked in as the date for the first deliveries in the country.

But how will Tesla do in the country? Up until this point all we knew was that Tesla has already seen a "tremendous" response in the country. When Tesla vice president of corporate and business development Diarmuid O'Connel described the demand in China at the auto show in Detroit in early January, however, he didn't give any figures.

But Tesla vice president of China operations Veronica Wu, who worked in Apple's China unit from 2006 until joining Tesla in December, finally shared some sales estimates. Tesla is aiming for its China unit to contribute about a third of Tesla's total sales growth in 2014, Wu told Reuters in a recent interview. Based on her prediction that Tesla could approximately double sales in 2014, a third of estimated 2014 sales growth would equal about 7,400 vehicles -- more than the 6,900 Tesla sold globally in its fourth quarter.

Musk even told Bloomberg in a phone interview this week that its China sales have the potential to hit an annualized rate that exceeds U.S. volume by the end of next year. But that's "a big maybe," he warned. And whether the annualized sales in China exceed those in the U.S. also depends on how robust sales are in the U.S., of course.

Long-term plans
In Musk's interview with Bloomberg he stressed how crucial the Chinese market is to the company.

"I think it's really important. I think it could be as big as the U.S. market -- maybe bigger," he told Bloomberg. On the other hand, Musk showed some caution in his bullish outlook: "I don't want to get over excited about it."

Beyond Tesla's plans to expand to the country with deliveries, Tesla-branded retail stores and service centers, and a no-fee Supercharger network, Tesla is also considering China as a potential location for a production factory.

"Long-term there's no question we'll have a factory in China," He told Bloomberg. Going further, he admitted, "There is an argument for having that be our first major factory outside the U.S."

Given Tesla's very bullish valuation, any hints of aggressive expansion plans are good news for investors.

It's clear that Tesla believes much of its short-term growth could come from China, so investors should keep an eye on the company's plans and progress in the region. A great chance to really get an idea of what Tesla expects in the market will probably be when it announces full-year results and 2014 guidance at the beginning of February.

Why try to disprove an investment strategy already proven to work?
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal "The Motley Fool's 3 Stocks to Own Forever." These picks are free today! Just click here now to uncover the three companies we love. 

Read/Post Comments (1) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 25, 2014, at 10:56 PM, Vector wrote:

    This biggest mistake is for Tesla to open a factory in China. They will be requires to have a joint venture with a Chinese Company and they will steal the technology and sell it to another Chinese Company.

    When will the US learn that dealing with China is a no win situation.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2808682, ~/Articles/ArticleHandler.aspx, 8/28/2015 8:49:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Daniel Sparks

Daniel is a senior technology specialist at The Motley Fool. To get the inside scoop on his coverage of technology companies, follow him on Twitter.

Today's Market

updated 11 hours ago Sponsored by:
DOW 16,654.77 369.26 0.00%
S&P 500 1,987.66 47.15 0.00%
NASD 4,812.71 0.00 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2015 3:59 PM
TSLA $242.99 Down +0.00 +0.00%
Tesla Motors CAPS Rating: **