In what will likely be a significant milestone for the company, Tesla Motors (NASDAQ:TSLA) will begin selling the Model S luxury sedan in China this month, bolstered by the presence of none other than CEO Elon Musk himself, Bloomberg reports.
“We’re going to be doing our first customer deliveries later this month. Elon is going to be doing that personally,” Simon Sproule, Tesla’s vice president of marketing and communications, told Bloomberg Television in an interview on Wednesday. “It’s got huge potential.”
As the world’s largest auto market, Tesla is hoping that sales volume in China will match the volume in the U.S. as early as next year. Overall, Tesla is hoping to ramp up its production by 56 percent this year to help meet the demand in China, as well as expand its presence in Europe, Bloomberg says. Sproule added that the company hasn’t yet set an exact date to begin deliveries to the country.
Tesla should draw “positive commentary on the order book in China, with initial China deliveries this month leading to a media buzz,” Barclays equity analyst Brian Johnson said in a research report this week, cited by Bloomberg. Johnson rates the company at equal weight. “While we expect strong initial interest from early adopters in China (drawn from the tech and finance sectors, as in the U.S.), we see challenges to broader luxury market adoption,” he said.
Johnson also added that recent quarterly results (albeit unofficial ones) suggest that North American demand for the Model S has “plateaued,” though Sproule says that isn’t the case. Tesla operates differently than other automakers, as is well known by this point, and it relies on an order and delivery system, rather than lots of unsold inventory. The company is also ramping up for exports to other markets, Sproule said, per Bloomberg.
Sproule also added that the company is preparing units in a right-hand drive format, meant for the U.K. and Hong Kong markets.
The uptake of Tesla vehicles in China will prove to be interesting. Though China is resorting to desperate measures to curb its rampant pollution and emissions problems, it hasn’t been very enthusiastic about supporting an electric vehicle infrastructure, so adoption of EVs has been rather slow, despite government incentives for their purchase.