Tesla Launches Model S In China, Considers Chinese Factory

Tesla Motors CEO Elon Musk says that his company will eventually open a factory in China, just after the company official launched sales of the Model S electric sedan there this week. In China, the Tesla Model S will sell for the equivalent of about $121,000 with an 85-kWh battery pack, a premium of about $40,300 compared to the same model in the U.S.

Tesla defended its pricing difference for the Chinese market as reflecting only shipping costs, import duties to China, and value-added taxes for the Chinese market. Unlike some foreign automakers, Tesla did not further inflate the Model S price for the Chinese market.

“We know we could charge more,” Tesla said in a statement on its website. “We know that our competitors will try to convince Chinese consumers that our relatively lower price tag means the Model S is a lesser car, when the real reason their car costs more is that they make double the profit per car in China compared to the United States or Europe.”

Tesla CEO Musk said that launching the Model S electric sedan in China was more challenging than in other markets because the Chinese government was very particular about evaluating the car. “They were the most rigorous of any in the world,” Musk told Bloomberg. “They seemed to be quite concerned about quality.”

Musk also said that he expects China to match American sales of the Tesla Model S by 2015, in part because the massive increase in gasoline-powered cars on the roads has caused pollution and smog, incentivizing customers to adopt cleaner cars. Keeping the electric car’s price reasonable, rather than artificially inflating it for the Chinese market, will help Tesla achieve that goal. In the fourth quarter of 2013, Tesla saw its sales exceed predictions by 20 percent, with 6900 cars sold.

As sales in China expand, Musk also said he is interested in building the Model S or other future models there. Currently, Tesla only manufactures cars at its factory in Fremont, California. “Long-term there’s no question we’ll have a factory in China,” Musk told Bloomberg. “There is an argument for having that be our first major factory outside the U.S.”