Photo: Catalin Garmacea
When Tesla officially announced it was going to sell its EV in China early last year, things were looking good. Stock prices listened and for a country with so much pollution like China, the prospect of having a real EV to buy was looking bright to the customers. However, things didn’t turn out that great and it might’ve been Tesla’s fault.
According to recent media reports, the Chinese branch of the company still has to sell nearly half of the cars that were originally sent over. The total number of Model S cars imported in the communist country last year was 4,800 while the sales figures show that only 2,499 managed to leave the dealership lots. That leaves around 2,301 units unaccounted for.
Back in October, Elon Musk introduced the more powerful and faster P85D model and the customers reacted almost immediately, canceling their orders and buying the new model. But wasn’t there a deposit?
Well, there were two, to be frank. The regulations imposed by Tesla ask for an initial deposit when the order is placed (that’s CNY15,000 or $2,394 in US dollars) and another one when the car is being shipped to China (CNY250,000 or $39,920). However, customers have rarely paid the second one, usually getting their cars after paying the initial deposit.
The wealth of the customers plays yet another part, as even if they paid the second deposit would eventually cancel their initial order and get the P85D model.
The problem is, even though the Chinese branch suggested this might be a little too much, their plan backfired, a lot of people (excluding the extremely wealthy) considering this claim as a bit too pricey.
That’s how the Chinese branch of Tesla ended up having over 2,000 cars on stock at the moment and trying really hard to come up with a solution to sell them all.
Things are not going to be made any easier either. Elon Musk just asked for a third of the staff Tesla has in China to be let go, amid protests from both the higher management and lower ranks.
Furthermore, he dismissed the proposal of selling the remaining cars at a 20 percent discount or through third party dealerships (as the number of Tesla dealers is limited and very low at the moment). These decisions are hard to understand, especially since the company wouldn’t take a big hit in terms of profits. In case you forgot, the Tesla Model S starts at CNY648,000 which is around $104,428 at today’s rates, well over what the company is charging back home.
What happened?
There are a couple of suggested reasons for this mishap. First of all, Chinese media claims that sources inside the company say that most of them are still in dealership parking lots because of cancellations.Back in October, Elon Musk introduced the more powerful and faster P85D model and the customers reacted almost immediately, canceling their orders and buying the new model. But wasn’t there a deposit?
Well, there were two, to be frank. The regulations imposed by Tesla ask for an initial deposit when the order is placed (that’s CNY15,000 or $2,394 in US dollars) and another one when the car is being shipped to China (CNY250,000 or $39,920). However, customers have rarely paid the second one, usually getting their cars after paying the initial deposit.
The wealth of the customers plays yet another part, as even if they paid the second deposit would eventually cancel their initial order and get the P85D model.
The second strike
Another reason follows from the initial one. Learning about this new habit of the Chinese customers and trying to put the brakes on the phenomenon, the American company decided to increase the original deposit to CNY50,000 (close to $10,000).The problem is, even though the Chinese branch suggested this might be a little too much, their plan backfired, a lot of people (excluding the extremely wealthy) considering this claim as a bit too pricey.
That’s how the Chinese branch of Tesla ended up having over 2,000 cars on stock at the moment and trying really hard to come up with a solution to sell them all.
Things are not going to be made any easier either. Elon Musk just asked for a third of the staff Tesla has in China to be let go, amid protests from both the higher management and lower ranks.
Furthermore, he dismissed the proposal of selling the remaining cars at a 20 percent discount or through third party dealerships (as the number of Tesla dealers is limited and very low at the moment). These decisions are hard to understand, especially since the company wouldn’t take a big hit in terms of profits. In case you forgot, the Tesla Model S starts at CNY648,000 which is around $104,428 at today’s rates, well over what the company is charging back home.
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