Elon Musk has admitted that Tesla sales in China haven’t met expectations, but that doesn’t seem to have tempered his bullish attitude towards the world’s largest car market. After sitting down with the state-run news agency Xinhua, Musk said that Tesla Motors could be looking to localize production in China “in three years”, making the automaker eligible for substantial government incentives.
“We have a strong long-term commitment to China, and we tend to establish both local production and local engineering in China,” Musk said. Localization could be possible “in three years”, though that seems unlikely even by Tesla’s own internal predictions. The Fremont factory that Tesla owns in full has a production capacity of at least 300,000 vehicles per year, which by Tesla’s own projections won’t happen until 2019 at the absolute soonest. From there, Tesla is expecting sales to climb to 500,000 units in 2020, and by 2025 Musk thinks the electric automaker could sell “a few million” vehicles every year. A more realistic analysis places Tesla sales around 300,000 in 2020, which would still be an impressive, but far more doable feat.
As for Tesla’s sales troubles in China, Musk blames “scalpers” who placed orders for multiple cars thinking they could flip them for even more money based on limited demand. But when that demand didn’t materialize like Musk and the scalpers anticipated, Tesla was left with lots of cancelled orders for already-built cars. That would be one of the drawbacks of Tesla’s built-to-order model, I suppose. However, the Tesla CEO went on to say he was “quite optimistic” about Tesla’s sales prospects in China, and that eventually, both it and Europe would get localized production centers of their own. Before the automaker can do that though, Musk admits that it must “boost the confidence” of consumers in China.
Maybe they’re just not as susceptible to Musk’s natural charm?