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An adventurous story is go- ing to be relived in China， telling how a U.S. electric car enterprise makes its path towards the Chinese market.
The protagonist of this story is Tesla， a rising star busy spreading its fame to every house in the United States. Before long， Tesla officially started to provide reservation and sales services for Chinese consumers， marking its fist step of development in China.
After being exposed to the spotlight long enough in the United States， Tesla has been eyeing the Chinese market for long. However， what this U.S. electric car giant faces is more than the largest auto market in the world. It has to get used to an electric auto market that is far less matured than that of the U.S. Wether Tesla， which previously claimed to “have no component rivals in the world”， can have a successful development path in China needs to be reviewed by the market.
The Unrolled Curtain
One week before the start of September， Kingston Chang， General Manager of Tesla China， said through his Microblog that Tesla is going to accept the reservations from Chinese consumers. But he did not reveal any details.
“At present Tesla only received inadvance reservations of Model S but when the car will be made and delivered to the customers remains unknown. The price of Model S for Chinese consumers is also a mystery. Any Chinese consumers that are interested in reserving the car can directly contact Tesla and sign an interim purchasing agreement with Tesla. He/she needs to pay RMB 250 thousand as the reservation fee，” says Shen Qi， Sales Manager of Tesla China.
As seen by the experts of auto marketing， Tesla adopts the online reservation because it has been used to marketing through Internet – in Hong Kong， it adopts the same way of selling cars through online reservation. On the other hand， Tesla has not yet established a tangible store in China and the Internet is their only resort to distribution in this country.
In the Grass Land Shopping Mall in the Eastern Third Ring of Beijing stands a 800-sqm exhibition hall， a charming and eye-catching poster of Model S identifies its owner – Tesla. This is the first exhibition hall of Tesla in China， also the biggest one in the world. By now， the decoration of the hall has been finished， but when it will work is not shown in any schedule.
For this， an insider from Tesla China says that the opening time of Tesla China’s exhibition hall in Beijing has not been determined yet. This is because that Tesla has yet been done with the logo application， and also that Tesla China has to wait for the approval of its U.S. headquarters. Rumor had it that this exhibition hall will be opened at the end of this year as the first store of Tesla in China， but Tesla China did not give any comment on this. Actually， it is not very likely for Tesla to begin to directly sell cars to Chinese consumers， because it has not finished relevant procedures of gaining business qualification in China. As China’s Management Methods of Selling Auto Brands & Products says， any foreign company that wants to set up a sales company in China must get registered in the industrial and commercial administrative departments and put on a file in China’s Ministry of Commerce. After that， they need to apply for 3C authorization with the quality supervision department in China and pass the tests of the environmental protection of both the central and local governments of where the sales stores are located. Generally speaking， it will take 4-6 months to finish all the procedures. Previously， a senior executive of Tesla said that Tesla was expected to sell cars in China in 2014.
Hurdles Met
Though Tesla is busy preparing for the entry into the Chinese market， its outlook of expanding the Chinese market has already been clouded.
The biggest problem comes from the registration of logo. It is known that Zhan Baosheng， a businessman from Guangdong， registered the TELSA logo in China in 2006. In addition， he also claimed the ownership of the brands of “Te Si La” （特斯拉， Tesla’s Chinese name） and Teslamotors.
Undoubtedly， this has brought Tesla a great trouble. The logo Zhan Baosheng registers is the same with Tesla’s brand in the United States. Zhan Baosheng also built a website， which displays an electric car and announces the ambition of making the best electric car in China.
For this， legal experts knowing well of trademark dispute says it is hard for Tesla to resolve the problem of logo unless it resorts to buying. This July， Diarmudio Connell， Tesla’s Vice President in charge of business expansion， led a team to China with the goal of solving this problem. However， Zhan Baosheng asked for US$30 million， much higher than the RMB-2-million offer of Tesla. This finally led to the disruption of the negotiation.
After this， outsiders think that Tesla might find another solution to the trademark problem. The enterprise data provided by the Beijing Municipal Administration of Industry and Commerce shows that Tesla already founded Tesla Sales （Beijing） Co.， Ltd in November 2012. The company’s registered capital amounts to US$2 million and uses “Tuo Su Le” （拓速乐， another transliteration of Tesla） instead of the common Chinese translation “Te Si La”. The legal representative of Tuo Su Le was Deepak Ahuja， CFO of Tesla. The term of operation is 30 years. Therefore， it is widely believed that Tesla will use the new Chinese name in its development in China. However， the change of Chinese name puts Tesla at the disadvantage. It means that it gives up its already famous brand in China and start from the scratch to build a new one. It means that is has cut the ties with its origin in the United States， rendering itself unable to use any experiences and influence from its rise in its home country.
Shen Qi says that the name of the sales company is not the same thing with the logo. The U.S. headquarters of Tesla has no plans of giving up the trademark of Tesla or its commonly-known Chinese translation. It is believed that Tesla is going to restart the negotiation with Zhan Baosheng till the two reach an agreement on the Tesla logo.
Tesla is still far from selling cars in China， but the delay has little influence over Tesla’s development in China. This March， Tesla recruited Kingston Chang， former General Manager of Bentley China. Meanwhile， it has established the direct sale as its marketing pattern in China.
The Unpredictable Market
In comparison， the trademark problem that can be solved directly through money or in the roundabout way of changing the brand might be the least difficult problem of Tesla in China. Thus U.S. electric company might face unimaginable problem in the Chinese market.
“Compared with the United States， where the new energy cars have a developed model and a matured market， the spread of new energy cars， especially electric cars， has just started in China. Presently， there are only a few pilot cities with electric cars running，” says Zhang Zhiyong， an analyst of the auto industry. In his opinion， when Tesla gets into China， it has to face the competition with Chevrolet hybrid car and electric cars from General Motors and Nissan. These also share one same problem – fostering the market and recruiting consumers.
According to the statistical data from the China Association of Automobiles， there were 15 million passenger cars used in China in 2012， but only 24 thousand units of them are electric cars or hybrid cars. Meanwhile， the Chinese government has subsidies for the new energy cars， but they are only given to the hybrid cars produced in China. Previously， Daimler Group reached an agreement with China-based BYD to found a joint venture in China to launch a new brand of hybrid cars.
“The electric cars are too expensive. This is a factor that every foreign automaker must put into consideration，” says Zhang Zhiyong. Tesla’s Model S， which has been put onto the shelf in the U.S.， is sold at between US$70 thousand and 100 thousand in the American market. Given the 25% imports tax， 17% value-added tax and other additional tax， the sales price of Model S in China is estimated to be at least RMB 600 thousand. “The existing electric car brands in China， such as Leaf and Volt， are positioned as cars for ordinary. In comparison， Tesla is more like a luxury product and a symbol of nobility. In the Chinese market， some customers with strong economic power might have tried to use it， but it is difficult to tell how big this market is and how long the market can sustain，” says Chen Wenkai， CEO of Gasgoo.com.
Tesla followed a different path when it comes to the development pattern. It started with the luxury electric cars， which are sold at US$100 thousand per unit； then it shifted its focus to Model S with the price tag of US$70 thousand and the expected annual output of 20 thousand units； the third phase， which has not yet come， features the cars with consumer-friendly prices for the ordinary people. The annual output of this car is going to be around 500 thousand units.
“It is not a bad idea for Tesla to target a specific market and relate the brand with the upper class of China. Since China boasts a big auto market， there are always a certain number of consumers willing to accept the price of Tesla，” says Chen Quanshi， Director of the Electric Car Branch at the Chinese Institute of Automobile Engineering. Whether Tesla can succeed in the Chinese market with its strategy of “pioneering in the market with high prices” largely depends on whether it can have 2%-3% of Chinese automobile consumers buy its products. In addition， Chen Shiquan says that the product quality and the consummation of charging systems in China will also affect the development of Tesla in China.
Those are the problems that might stop Tesla from expanding and having success in China. Tesla’s spokesman refuses to comment on those problems， but he makes sure that Tesla has already been determined to get into the Chinese market. “Many difficulties are waiting ahead of us， but we going to take active measures to overcome them，” says Kingston Chang.
At the start of August， Elon Musk， founder of Tesla， said that BYD was not a capable rival for Tesla as a reply to the challenge of Wang Chuanfu， BYD’s board chairman. But whether Telsa’s performance in China can live up to its fame and Musk’s confident is largely dependent on its continuous development force.
The protagonist of this story is Tesla， a rising star busy spreading its fame to every house in the United States. Before long， Tesla officially started to provide reservation and sales services for Chinese consumers， marking its fist step of development in China.
After being exposed to the spotlight long enough in the United States， Tesla has been eyeing the Chinese market for long. However， what this U.S. electric car giant faces is more than the largest auto market in the world. It has to get used to an electric auto market that is far less matured than that of the U.S. Wether Tesla， which previously claimed to “have no component rivals in the world”， can have a successful development path in China needs to be reviewed by the market.
The Unrolled Curtain
One week before the start of September， Kingston Chang， General Manager of Tesla China， said through his Microblog that Tesla is going to accept the reservations from Chinese consumers. But he did not reveal any details.
“At present Tesla only received inadvance reservations of Model S but when the car will be made and delivered to the customers remains unknown. The price of Model S for Chinese consumers is also a mystery. Any Chinese consumers that are interested in reserving the car can directly contact Tesla and sign an interim purchasing agreement with Tesla. He/she needs to pay RMB 250 thousand as the reservation fee，” says Shen Qi， Sales Manager of Tesla China.
As seen by the experts of auto marketing， Tesla adopts the online reservation because it has been used to marketing through Internet – in Hong Kong， it adopts the same way of selling cars through online reservation. On the other hand， Tesla has not yet established a tangible store in China and the Internet is their only resort to distribution in this country.
In the Grass Land Shopping Mall in the Eastern Third Ring of Beijing stands a 800-sqm exhibition hall， a charming and eye-catching poster of Model S identifies its owner – Tesla. This is the first exhibition hall of Tesla in China， also the biggest one in the world. By now， the decoration of the hall has been finished， but when it will work is not shown in any schedule.
For this， an insider from Tesla China says that the opening time of Tesla China’s exhibition hall in Beijing has not been determined yet. This is because that Tesla has yet been done with the logo application， and also that Tesla China has to wait for the approval of its U.S. headquarters. Rumor had it that this exhibition hall will be opened at the end of this year as the first store of Tesla in China， but Tesla China did not give any comment on this. Actually， it is not very likely for Tesla to begin to directly sell cars to Chinese consumers， because it has not finished relevant procedures of gaining business qualification in China. As China’s Management Methods of Selling Auto Brands & Products says， any foreign company that wants to set up a sales company in China must get registered in the industrial and commercial administrative departments and put on a file in China’s Ministry of Commerce. After that， they need to apply for 3C authorization with the quality supervision department in China and pass the tests of the environmental protection of both the central and local governments of where the sales stores are located. Generally speaking， it will take 4-6 months to finish all the procedures. Previously， a senior executive of Tesla said that Tesla was expected to sell cars in China in 2014.
Hurdles Met
Though Tesla is busy preparing for the entry into the Chinese market， its outlook of expanding the Chinese market has already been clouded.
The biggest problem comes from the registration of logo. It is known that Zhan Baosheng， a businessman from Guangdong， registered the TELSA logo in China in 2006. In addition， he also claimed the ownership of the brands of “Te Si La” （特斯拉， Tesla’s Chinese name） and Teslamotors.
Undoubtedly， this has brought Tesla a great trouble. The logo Zhan Baosheng registers is the same with Tesla’s brand in the United States. Zhan Baosheng also built a website， which displays an electric car and announces the ambition of making the best electric car in China.
For this， legal experts knowing well of trademark dispute says it is hard for Tesla to resolve the problem of logo unless it resorts to buying. This July， Diarmudio Connell， Tesla’s Vice President in charge of business expansion， led a team to China with the goal of solving this problem. However， Zhan Baosheng asked for US$30 million， much higher than the RMB-2-million offer of Tesla. This finally led to the disruption of the negotiation.
After this， outsiders think that Tesla might find another solution to the trademark problem. The enterprise data provided by the Beijing Municipal Administration of Industry and Commerce shows that Tesla already founded Tesla Sales （Beijing） Co.， Ltd in November 2012. The company’s registered capital amounts to US$2 million and uses “Tuo Su Le” （拓速乐， another transliteration of Tesla） instead of the common Chinese translation “Te Si La”. The legal representative of Tuo Su Le was Deepak Ahuja， CFO of Tesla. The term of operation is 30 years. Therefore， it is widely believed that Tesla will use the new Chinese name in its development in China. However， the change of Chinese name puts Tesla at the disadvantage. It means that it gives up its already famous brand in China and start from the scratch to build a new one. It means that is has cut the ties with its origin in the United States， rendering itself unable to use any experiences and influence from its rise in its home country.
Shen Qi says that the name of the sales company is not the same thing with the logo. The U.S. headquarters of Tesla has no plans of giving up the trademark of Tesla or its commonly-known Chinese translation. It is believed that Tesla is going to restart the negotiation with Zhan Baosheng till the two reach an agreement on the Tesla logo.
Tesla is still far from selling cars in China， but the delay has little influence over Tesla’s development in China. This March， Tesla recruited Kingston Chang， former General Manager of Bentley China. Meanwhile， it has established the direct sale as its marketing pattern in China.
The Unpredictable Market
In comparison， the trademark problem that can be solved directly through money or in the roundabout way of changing the brand might be the least difficult problem of Tesla in China. Thus U.S. electric company might face unimaginable problem in the Chinese market.
“Compared with the United States， where the new energy cars have a developed model and a matured market， the spread of new energy cars， especially electric cars， has just started in China. Presently， there are only a few pilot cities with electric cars running，” says Zhang Zhiyong， an analyst of the auto industry. In his opinion， when Tesla gets into China， it has to face the competition with Chevrolet hybrid car and electric cars from General Motors and Nissan. These also share one same problem – fostering the market and recruiting consumers.
According to the statistical data from the China Association of Automobiles， there were 15 million passenger cars used in China in 2012， but only 24 thousand units of them are electric cars or hybrid cars. Meanwhile， the Chinese government has subsidies for the new energy cars， but they are only given to the hybrid cars produced in China. Previously， Daimler Group reached an agreement with China-based BYD to found a joint venture in China to launch a new brand of hybrid cars.
“The electric cars are too expensive. This is a factor that every foreign automaker must put into consideration，” says Zhang Zhiyong. Tesla’s Model S， which has been put onto the shelf in the U.S.， is sold at between US$70 thousand and 100 thousand in the American market. Given the 25% imports tax， 17% value-added tax and other additional tax， the sales price of Model S in China is estimated to be at least RMB 600 thousand. “The existing electric car brands in China， such as Leaf and Volt， are positioned as cars for ordinary. In comparison， Tesla is more like a luxury product and a symbol of nobility. In the Chinese market， some customers with strong economic power might have tried to use it， but it is difficult to tell how big this market is and how long the market can sustain，” says Chen Wenkai， CEO of Gasgoo.com.
Tesla followed a different path when it comes to the development pattern. It started with the luxury electric cars， which are sold at US$100 thousand per unit； then it shifted its focus to Model S with the price tag of US$70 thousand and the expected annual output of 20 thousand units； the third phase， which has not yet come， features the cars with consumer-friendly prices for the ordinary people. The annual output of this car is going to be around 500 thousand units.
“It is not a bad idea for Tesla to target a specific market and relate the brand with the upper class of China. Since China boasts a big auto market， there are always a certain number of consumers willing to accept the price of Tesla，” says Chen Quanshi， Director of the Electric Car Branch at the Chinese Institute of Automobile Engineering. Whether Tesla can succeed in the Chinese market with its strategy of “pioneering in the market with high prices” largely depends on whether it can have 2%-3% of Chinese automobile consumers buy its products. In addition， Chen Shiquan says that the product quality and the consummation of charging systems in China will also affect the development of Tesla in China.
Those are the problems that might stop Tesla from expanding and having success in China. Tesla’s spokesman refuses to comment on those problems， but he makes sure that Tesla has already been determined to get into the Chinese market. “Many difficulties are waiting ahead of us， but we going to take active measures to overcome them，” says Kingston Chang.
At the start of August， Elon Musk， founder of Tesla， said that BYD was not a capable rival for Tesla as a reply to the challenge of Wang Chuanfu， BYD’s board chairman. But whether Telsa’s performance in China can live up to its fame and Musk’s confident is largely dependent on its continuous development force.