Thursday, April 6, 2017
China is Tesla’s most lucrative opportunity
Like many US companies looking to grow, Tesla has its eyes on China. After some early issues with slow deliveries and lower-than-desired sales, the electric carmaker topped $1 billion in revenue in China in 2016, more than triple the revenues it made there in 2015. Still, despite the gains, Tesla’s Chinese business remains far behind the money it makes in the US.
In late March, though, Tesla got another boost when Chinese internet giant Tencent acquired a 5% stake in the company. Though the move won’t raise any cash for Tesla directly — cash it could sure use this year — it can be seen as a vote of confidence from a major power in the country. Tesla CEO Elon Musk referred to Tencent as an “advisor” going forward.
This chart from Statista helps explain why making moves in China is significant for Tesla’s future success. Not only has China sold more electric cars than Europe or the US over the past couple of years, it’s also grown at a much faster rate.
Now, that’s not saying too much, since electric car adoption is still tiny as a whole. But as the world’s most populous country, and with tighter emission standards making it a friendlier place for “cleaner” cars like Tesla’s, China may have more room for future growth than the US, where President Donald Trump plans to relax similar restrictions.
Mike Nudelman/Business Insider/Statista