Tesla Motors, Inc. Faces New and Recurring Headaches in China

Tesla Motors has much potential in the world's largest automotive market, but it also faces many hurdles and headaches in China, as well.

Jul 8, 2014 at 3:00PM
Longview

The Dow Jones Industrial Average (DJINDICES:^DJI) has lost more than 100 points near the end of today's trading session as second-quarter earnings season approaches. According to Reuters, roughly 60% of stocks trading on the NYSE have dropped, and nearly 75% of Nasdaq-listed companies are down.

Despite the market's treading water early this week, investors should keep in mind that the Dow recently broke through 17,000 for the first time ever and that economic data is expected to show stronger growth in the second quarter. So long as consistent growth is expected and achieved, the stock market remains the best option for long-term investors.

With that in mind, here are a couple of headlines in the automotive industry today.

Tesla Motors (NASDAQ:TSLA) is receiving a crash course in how difficult doing business in China can be. Tesla believed its trademark infringement conflict with Chinese businessman Zhan Baosheng had been resolved, removing one barrier of entry to the world's largest automotive market.

Apparently, that's not the case, and Zhan is taking the Palo Alto-based automaker to court and demanding the company stop all sales and marketing activities, as well as pay him $3.9 million in compensation.

This is just the latest in a long list of trademark problems foreign companies have faced in China. Even Apple paid $60 million for the rights to use the iPad trademark in China, though that amount is laughable for the iPhone maker. Likewise, Tesla can easily afford the $3.9 million demanded by Zhan, but the situation underlines a bigger problem: the difficulty of doing business in China. This will prove a constant threat as Tesla ramps up deliveries in what it expects will be its largest market for Model S deliveries as soon as next year.

Bg

Tesla charging station. Source: Tesla Motors

In other China-related news, Beijing is reportedly planning to install as many as 10,000 public charging stations by 2017, according to Chinese news service Caixin Online. Unfortunately for those Tesla investors hoping this could be the start of a collaboration to build out Tesla supercharger infrastructure, it isn't: Those public charging stations aren't reported to be compatible with Tesla vehicles. That's more than frustrating, especially considering that Tesla just released  its patents in an attempt to avoid scenarios like this.

In broader automotive-industry news, automakers have recalled more vehicles in the United States than in any other year on record -- with six months remaining on the calendar. The National Highway Traffic Safety Administration has tallied roughly 37.5 million vehicles recalled this year, which has already crushed the previous record of 30.8 million set in 2004. 

It's been a downward spiral for the industry in terms of recalls, which General Motors (NYSE:GM) kicked off this year with a tragic ignition-switch recall that revealed remarkable corporate ignorance starting as long as a decade ago. On top of that, Japanese automakers have been dealing with faulty air-bag problems from a supplier, Takata Corp.

Despite the recalls, the U.S. auto industry is continuing its sales rebound and recently posted two of the best months, in terms of seasonally adjusted annual rate of vehicles sold, since the recession wrecked vehicle sales roughly six years ago. 

Warren Buffett's worst auto nightmare (hint: It's not Tesla)
A major technological shift is happening in the automotive industry. Most people are skeptical about its impact. Warren Buffett isn't one of them. He recently called it a "real threat" to one of his favorite businesses. An executive at Ford called the technology "fantastic." The beauty for investors is that there is an easy way to invest in this megatrend. Click here to access our exclusive report on this stock.

Daniel Miller has no position in any stocks mentioned. The Motley Fool recommends Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers