Tesla prizes China market despite hurdles

U.S. electric vehicle maker Tesla made its debut in China this week amid applause over its lower-than-expected price tag, but consumers are still concerned about issues such as battery charging.

The company plans to have showrooms and maintenance centers open in more major cities in east China this year as part of its outreach to consumers in the world's largest auto market, Veronica Wu, Tesla's vice president, told Xinhua on Friday.

She also said CEO Elon Musk wants to double Tesla's auto production this year and sees China as a key driver of its global auto sales growth.

Despite these ambitions, its efforts to build a strong presence in China face many hurdles.

Wu said pre-orders of its Model S in China have been dynamic in the past few months, but prospective car buyers in China are still resistant to the idea of driving a purely electric vehicle, mostly out of concern that it is hard to find places to recharge the car.

At Tesla's Beijing showroom -- the first and so far only one in China's mainland -- Xinhua reporters found customers gathering around the company's popular Model S, with some venturing inside to try driving an electric vehicle.

A sales representative at the showroom said people who check out the Model S come with a broad range of questions, but the most frequently asked is where to charge the car, especially when running long-distance trips.

Tesla has said it will build free-to-use charging stations along expressways linking Beijing and Shanghai. The Model S can run up to 500 km after an hour of charging at one of these stations.

The insufficient infrastructure will likely hold back Tesla's sales and expansion in China. But Wu expressed confidence in the Chinese government's commitment to advancing its green initiatives.

"Based on our contacts with officials in central and local governments, we find that authorities are very open to discussions about sustainable solutions to problems posed by growing automobile ownership," she said.

Wu labels Tesla's commitment to the Chinese market "unprecedented" compared with many multinational firms such as Apple and Motorola that she has previously worked for.

Tesla marked its entry to the highly competitive Chinese auto market with an online announcement on Thursday that the price of its Model S constitutes only its original price in the United States and unavoidable taxes and shipping costs.

Yet competitive pricing alone does not promise strong sales in China. A host of big Chinese cities have moved to cap the growth of automobile ownership to alleviate traffic congestion and air pollution.

Authorities have been encouraging purchases of hybrid and electric cars by granting more quotas and subsidies for buyers, but Tesla has yet to make the official list of cars eligible for such preferential policies.

Wu said Tesla is in talks with relevant government departments over this issue, recognizing that Tesla's inclusion on the list would make its cars much more attractive to Chinese consumers.

She said the company has grand vision for its China business, even though its current China-based team of less than 30 people is building from scratch.

Wu also said she felt encouragement from the fact that China has seen "leapfrog development across many industries in the past" as an unsatisfactory status quo in many sectors has led to faster adoption of the latest technologies.

Kingston Chang, Tesla's general manager in China, also added, "Though we sell cars, we are more of a tech company and we are in a business consistent with China's goal of developing more sustainably. This means huge opportunities for us going forward."