By Zhou Tian
BEIJING ( Caixin Online ) — Tesla Motors Chief Executive Elon Musk was mobbed like a pop star last year while introducing Chinese consumers to his company’s Model S electric car.
Amid the frenzy, the American billionaire-entrepreneur ambitiously predicted China would account for up to 35% of his car company’s global sales in 2014.
The prediction proved wrong. In fact, Tesla’s China sales were so disappointing that the company’s China division dismissed two chief executives within a few months of Musk’s visit in April.
Based on vehicle-licensing data compiled by the China Automobile Dealers Association, Tesla’s /zigman2/quotes/203558040/composite TSLA +0.70% China unit sold only 2,499 electric cars last year, or barely half the number of Model S cars imported into the country. And China sales accounted for only a fraction of the 31,700 Tesla vehicles sold worldwide last year, according to the Nasdaq-listed company’s latest financial report.
But company sales in China strengthened in the first quarter 2015, with new Tesla owners licensing 1,055 vehicles, according to marketing consultancy JL Warren Capital. Musk’s company is also trying new strategies in hopes of drumming up business under Tom Zhu Xiaotong, Tesla’s current executive in charge of China operations.
Zhu, who once headed Tesla’s charging-network development unit in China, has held Tesla’s top position in the country since replacing Veronica Wu Bixuan last August. Wu stepped down after just nine months on the job, apparently a victim of the sluggish sales.
Under Zhu, this year could mark a turnaround for Tesla China. By working to address unique market-access hurdles, from battery-charging stations to government relations, Zhu’s team hopes to win more consumers by proving Tesla can adapt.
The China team also hopes that at least some of Musk’s predictions about China sales eventually come true.
Musk may be as popular as a pop star, but his electric-car company has a long way to go before it’s a favorite brand in China.
Indeed, Tesla’s China business faces formidable challenges. Zhu recently said the company is wrestling with car-battery-charging issues unique to the country. Musk entrusted Zhu to resolve these issues, which center on differences between Chinese-made battery charging systems and those of Tesla.
In recent years, the state-run power distributors State Grid and China Southern Grid have opened more than 20,000 battery-charging stations around the country that are only compatible with electric vehicles made in China, such as BYD’s /zigman2/quotes/206867707/delayed HK:1211 +4.34% /zigman2/quotes/200126312/composite BYDDF -2.73% /zigman2/quotes/207153762/delayed CN:002594 +7.07% cars. In addition, by 2017 the capital plans to open 10,000 battery-charging stations solely for made-in-China vehicles.
A State Grid executive said he does not think the charging-station compatibility issue can be resolved, but Tesla has not thrown in the towel. Instead, the company has crafted a multi-pronged strategy for opening battery-charging stations around the country, so that its customers can keep their cars rolling.
For starters, since April 2014 the company has been building its own network of charging stations. So far, it has opened about 40 stations in 19 cities and has installed some 600 smaller “charging points” around the country.
Tesla has also signed deals with China Minsheng Bank /zigman2/quotes/208095167/delayed HK:1988 +2.75% /zigman2/quotes/203910009/delayed CN:600016 +0.19% /zigman2/quotes/200749234/composite CMAKY +4.66% and telecom operator China Unicom /zigman2/quotes/205091392/delayed HK:762 -0.60% /zigman2/quotes/205476740/composite CHU +10.24% so it can install charging stations at hundreds of banks and retail outlets around the country. So far, though, only a small number of these have been opened.