Tesla Motors Inc. Offers the Model S on the Cheap in China

Tesla Motors, (NASDAQ: TSLA  ) is at it again, it's changing car ownership in a big way, but this time it has its sights set on China. The electric-car company announced a revolutionary pricing structure for Chinese customers, a market that is used to paying a premium for luxury items. In general, when shopping for cars the Chinese consumer expects to pay a premium of about 32% more than the average American. Tesla's Model S price point, matched with the growth of the Chinese auto market spells massive revenue potential for the electric-car maker.

Tesla goes its own way, of course
In late January, the Model S maker launched its online design studio in China and announced the first-of-its-kind price point of just under $120,000. Tesla is marketing this as a fair price, stating that "if we were to follow standard industry practice, we could get away with charging twice as much for the Model S in China as we do in the US." So why isn't Tesla charging more?

Model S. Source: Tesla

A respectful price
It's simple, really, Tesla is intent on treating their Chinese customers just as well as they treat customers from any other market. The company has decided to defy convention and price the Model S at the same price point as it does here in the U.S., "adding only unavoidable taxes, customs duties, and transportation costs." The company isn't "even factoring in the cost of the free-to-use Superchager network that Tesla will build across China." Tesla's competitors charge a lot more and make a much greater profit per car in China than they do in the U.S. or Europe. What a racket the traditional auto industry has drummed up in China, and here goes Tesla disrupting everything... again.

Source: OICA website

A huge opportunity
The Chinese auto market is booming. Sales of passenger cars grew just about 15% last year, and the China Association of Automobile Manufacturers expects the Chinese auto market to grow 8%-10% in 2014. Analysts predict that the luxury car market in China could grow to about 3 million units by 2020. All of which is great news for Tesla's investors.

By offering the Model S at such an approachable price point, Tesla opens itself up to a wider audience in China, giving it a leg up on its competitors. German brands like Audi and Mercedes Benz dominate 70% of the high-end auto market in China, which brings in about $40 billion annually. While Tesla is a small fish in a big pond, the company is actually set to gain from some competitors' electric-vehicle sales, as it supplies EV components for use in other brands. Tesla has positioned itself at the forefront of the growing Chinese auto market, and will profit from it.

Golden ticket
Tesla is ready to strike gold in China. Offering the growing market a high-end electric vehicle at a substantially lower price point than comparable cars, while supplying its competitors with EV components, spells a win-win for Tesla's shareholders.

Opportunities to get wealthy from a single investment don't come around often
But they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.

 


Read/Post Comments (2) | Recommend This Article (1)

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.

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: 2863573, ~/Articles/ArticleHandler.aspx, 10/22/2014 4:18:15 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...


Advertisement