Tesla Kicks Off China Sales This Month With Musk Helming

Tesla Motors Inc., the electric-car maker, starts delivering its luxury sedans in China this month and said the company’s co-founder, billionaire Elon Musk, will be there to kick off the effort.

“We’re going to be doing our first customer deliveries later this month. Elon is going to be doing that personally,” Simon Sproule, Tesla’s vice president of marketing and communications, said in a Bloomberg Television interview yesterday. “It’s got huge potential.”

China may become Tesla’s biggest market, with sales in the nation matching the company’s U.S. volume as early as next year, Musk, 42, said earlier this year. The Palo Alto, California-based carmaker’s push into the world’s most populous country is part of a strategy to boost production of the Model S sedan by 56 percent this year, as Tesla also expands in Europe.

Tesla hasn’t set an exact date for the first deliveries in China, said Sproule, who was hired this month from the Renault SA-Nissan Motor Co. alliance.

The company’s China entry is being watched closely by other carmakers that have tried to convince local consumers to buy electric cars. The nation lags behind its target to have 5 million alternative energy-powered vehicles by 2020, due to a lack of charging stations and high costs, even as public concerns over worsening air pollution are mounting.

Tesla fell 5.9 percent to $204.19 at the close in New York. The stock has gained 36 percent this year.

‘Positive Commentary’

“We already have a first store in Beijing and we are building out the Supercharger network,” Sproule said. Tesla’s rapid charge stations, already in place across the U.S. and being installed in Europe, let a Model S get a 50 percent charge in about 20 minutes. That compares with between six and eight hours to recharge the car’s lithium-ion pack from a 240-volt outlet.

Tesla should draw “positive commentary on the order book in China, with initial China deliveries this month leading to a media buzz,” Brian Johnson, a New York-based equity analyst at Barclays Plc, said in a research report this week. He rates the company equal weight, or neutral.

“While we expect strong initial interest from early adopters in China (drawn from the tech and finance sectors, as in the U.S.), we see challenges to broader luxury market adoption,” Johnson said in the report.

Recent quarterly results also suggest U.S. demand for the Model S has “plateaued,” Johnson said.

U.K., Hong Kong

“We don’t believe that’s the case,” Tesla’s Sproule said. “We have a different kind of business model where we have orders and deliveries, and we’re also now building for export overseas.”

In addition to its China entry, the company is preparing right-hand drive versions of the Model S for sales in markets such as the U.K. and Hong Kong, he said.

In the U.S., Tesla is fighting with car dealer groups across the country to let the company sell directly to consumers from its own stores. The carmaker is also contending with its first so-called “Lemon Law” suit.

Tesla buyer Robert Montgomery of Franklin, Wisconsin, sued the automaker in a state court in Milwaukee earlier this week, claiming numerous breakdowns kept his sedan off the road for weeks, and demanding Tesla at least refund the more than $95,000 he paid for the car.

Montgomery said Wisconsin’s defective-car “Lemon Law” made him eligible for that money because Tesla failed to repair the vehicle adequately.

The suit contains “factual inaccuracies,” including how many times Montgomery asked Tesla to repurchase the vehicle, the company said on its website.

“We have been trying to work with the customer to work through the problem,” Sproule said yesterday. “We have been unable to do so. We have been trying to fix and replace things.”

Before it's here, it's on the Bloomberg Terminal.