Tesla Motors, Inc. Delivers First Cars to Hong Kong. Is Japan Next?

The first Tesla Model S cars were delivered to owners in Hong Kong last week. Now all eyes will be on the important Japan market.

Jul 27, 2014 at 9:00PM

Tesla Motors' (NASDAQ:TSLA) international rollout of Model S deliveries and Superchargers continues. The electric-car maker's latest move in Asia is in Hong Kong. While the company had a few models of its luxury Model S sedan there earlier this month, the first deliveries to customers didn't occur until last Wednesday. That was Tesla's third right-hand-drive market, and the company has only one such market left that it said it would enter this summer: Japan.

Hong Kong First Tesla

Right-hand drive Model S at the Hong Kong celebration of the first deliveries in the region. Image source: Tesla.

The Hong Kong rollout
"We could not be here without you," Jerome Guillen, Tesla's vice president of global sales, told the crowd in Hong Kong on Wednesday. "It is really meaningful, and we appreciate your commitment to helping us with our goal, which is to accelerate the transition to sustainable transportation."

In a blog post detailing the delivery event, Tesla said hundreds of enthusiasts and customers gathered at Hong Kong's Kai Tak Cruise Terminal. On Twitter, Tesla said it handed the keys to eight owners in Hong Kong. The company also announced the opening of the first two Supercharger stations in the region.

The delivery of vehicles to Hong Kong suggests Tesla is on schedule with its international rollout. In the company's first-quarter letter to shareholders, Tesla said it planned to deliver vehicles to the U.K., Hong Kong, and Japan all by "later this summer."

Why Japan matters
The expansion to right-hand-drive markets so far bodes well for the company's execution this year on its goal to grow its addressable market and boost annual deliveries by about 50% from 2014. But now the focus will shift to Japan, an expansion that will probably be more closely watched.

Japan is an important market for Tesla. During Tesla's second-quarter 2013 earnings call, Japan received special attention in reference to the company's international markets that it plans to expand to. Tesla CEO Elon Musk said it is taking the Japan market "very seriously."

"I know that lot of car companies don't take the Japan market really seriously, but I think we are going to do that," Musk explained on the call. [People in Japan are] very discerning and actually I would consider it a great honor if the Japanese were to actually buy our car."

Special attention to the market is probably a good idea, especially in light of the country's recent push for hydrogen fuel-cell technology. Not only are Japanese vehicle manufacturers such as Toyota making big bets on the new technology, but the government is also investing in hydrogen filling stations and is offering substantial subsidies for purchases of fuel-cell vehicles. Japan's government has committed to provide about $20,000 per car for subsidies toward Toyota's new hydrogen fuel-cell vehicle, which has a starting price of about $70,000 -- putting it neck and neck with Model S pricing.

Toyota Fuel Cell

Toyota fuel-cell vehicle. Image source: Toyota.

Hong Kong is Tesla's 16th market. And Japan could very well be Tesla's 17th. When Tesla reports earnings this Thursday, look for comments regarding Tesla's plans to expand to Japan. Also, we will hopefully get an update on how Tesla feels about the market and whether its international expansion is still on schedule.

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