When Bem Ho discovered the minivan he drives doesn't earn him
much respect, he ordered a set of wheels that will turn more heads: a Model S
electric sedan from
Tesla Motors (
TSLA)
"I'm getting sick of driving my van because when people see the car they
always think I'm a chauffeur," said Ho, who runs an apparel manufacturer in Hong
Kong. "It'll be like a talking point when you go out: 'Oh that's an electric
car.'"
Ho is among the 300-plus Hong Kong residents who have made refundable
deposits of $5,000 to $42,500 to reserve a Model S, even before the company has
said how much the cars will cost. That's more orders than Tesla has seen in the
U.K., Japan or Australia, sales manager Kenneth Lui said.
The Hong Kong success may bode well for the Palo Alto-based company in
mainland China, where it plans to open a Beijing showroom this year.
"While the influence of Hong Kong toward mainland China has decreased
compared to the 90s, it should still contribute to the development of the brand
in China," said Pablo Mauron, China general manager at market researcher Digital
Luxury Group.
Tesla, the electric carmaker founded by billionaire
Elon Musk, will find
ample company at the high end of the world's largest auto market.
Luxury vehicle sales there are dominated by Volkswagen's Audi, BMW and
Daimler's Mercedes-Benz, but they face a growing challenge from General Motors's
Cadillac, Nissan Motor's Infiniti and Tata Motors' Jaguar Land Rover.
As a maker of only electric vehicles, Tesla faces bigger hurdles than most of
its competitors. Consumers in China are put off by the price of electrics, and
with just 168 public charging stations nationwide, they fret that
battery-operated cars might run out of power before they reach home.
While China's central government is targeting cumulative sales of 5 million
electric vehicles by 2020, automakers sold just 12,791 of them last year,
Bloomberg New Energy Finance reports.
Until last year, the central government offered subsidies of as much as
60,000 yuan ($9,800) toward the purchase of electrics, with some cities adding
sweeteners. In Shanghai, the total rebate could top 175,000 yuan, according to
Bloomberg New Energy Finance. Since the government support lapsed last year,
though, it hasn't been renewed.
The aid helped boost sales at BYD Co., the Chinese automaker that counts
Warren Buffett's Berkshire Hathaway Inc. as a shareholder. In its hometown of
Shenzhen, 800 of BYD's e6 electrics are used as taxis, while its electric buses
are in operation in several cities.
The e6 costs 369,800 yuan without subsidies, versus a starting price of
349,900 yuan for the Cadillac XTS sedan, according to pricing data from
autohome.com.
Musk has also said the company is mulling a factory in Asia, where it might
make a smaller and cheaper model. For now, though, the cars it sells in Hong
Kong will be made in California.
To attract buyers in mainland China, Tesla plans to make the rear seat of the
Model S more luxurious since many wealthy Chinese have drivers, Musk said on an
Aug. 7 conference call.
The Model S was designed "to be the perfect driver's car," Musk said,
according to a transcript of the call. "Obviously if people are being driven
around, then we need to make sure the back seat is optimized."
Hong Kong offers advantages that Tesla won't find in the mainland. While the
territory is controlled by China, it remains largely isolated by geography and
culture. Hong Kong's main island is less than 10 miles wide -- well within the
range of the Model S, which Tesla says can travel more than 300 miles on a
charge. It's rare for Hong Kong commutes to extend beyond 20 miles, and since
the territory's British colonial masters left a legacy of driving on the left
side of the road, it's inconvenient for the city's drivers to venture into
neighboring areas of China.
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