Tesla unveils entry-level Model 3, analysts skeptical of its future in China

By Liang Fei Source:Globaltimes.cn Published: 2016-4-1 17:08:22

US premium electric car maker Tesla Motors unveiled its long-awaited Model 3 on Thursday with hopes of targeting the mass market, but Chinese analysts said it is still too early to predict its success in the mainland.

The starting price for the US market is $35,000, the company said. Though prices for China have not been announced, market analysts estimate a 350,000-yuan ($54,145) sticker price, including import duties and shipping costs.

Pre-orders for the new model in the mainland already started on Thursday at the company’s showrooms, and online orders started on Friday, the company said.

During the unveiling at Tesla’s design studio in Hawthorne, California on Thursday, company founder and CEO Elon Musk said global pre-orders for the car exceeded 115,000 within one day. 

A spokesman for the firm’s China branch declined to reveal their number of pre-orders Friday.

Production of the car will start in late 2017 and will be first delivered to the American market, the company said. 

Deliveries to the Chinese market will not begin until around 2018, news portal digi.tech.qq.com reported, citing Zhu Xiaotong, the company’s China head.

The moderately-priced Model 3 is considered crucial to Tesla’s annual sales target of 500,000 units by 2020. However, Chinese analysts said that it is too early to tell how the model will perform in the Chinese market, Tesla’s second-largest.

Zhang Yu, managing director of consultancy Automotive Foresight (Shanghai) Co, was not optimistic about the Model 3’s prospects in the mainland with a projected price point of 350,000 yuan.

“The price would be too much for China’s mass-market consumers. Affluent consumers may also not be very interested, as the entry-level Model 3 would fail to serve as something that they can show off,” Zhang told the Global Times Friday.

He added that Tesla is still not subject to government subsidies in the mainland, which would be a minus for sales of the Model 3 in China. “The US would still be the Model 3’s major market,” Zhang noted.

Tesla cars now enjoy some favorable government policies in China. For instance, Tesla owners are exempt from the license plate lottery in Beijing, a major selling point for Tesla cars.

“But at the same time this also makes sales of the car very vulnerable to policy changes,” Wu Shuocheng, a Shanghai-based independent auto analyst, told the Global Times, adding that it is still not clear whether the policy will change before 2018 when the Model 3 is expected to hit roads in the mainland.

In addition, charging technology and infrastructure may also not develop fast enough to convince Chinese mass-market consumers to buy an electric car like the Model 3, Wu added.

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