- Recent news from China about Tesla's demand has not yet made it to the international media and this article presents a rare opportunity to act on Tesla before everyone else.
- Tesla has already started getting incentives from Chinese cities like Shanghai. Tesla has unexpectedly large fleet sales in China.
- Based on these items Chinese demand for Tesla is being underestimated.
- I will also attempt to calculate savings to fleets by switching to Tesla's.
Since Tesla (NASDAQ:TSLA) delivered its first Model S in China on April 22nd, it has constantly been in the Chinese media. The coverage is mostly good and the only negative coverage involves customers not getting their cars as fast as they expected.
Almost as soon as Tesla launched the Model S in China, the city of Shanghai announced incentives for the car. Shanghai will waive the cost of license plates (link to Shanghai govt regulation, both in Chinese), which would normally be about $16,000/car for 3000 Model S's. This makes the Model S a lot more competitively priced than gas cars from other luxury automakers, who are already price gouging in China.
China has also said that it is working on lowering import tariffs on foreign manufactured Electric vehicles. China is serious about reducing pollution and smog in cities.
For fleets such as taxicabs which put large numbers of miles on cars, the Model S represents significant savings over a gas car. If we assume that an average taxi drives 70,000 miles in a year - that's about 200 miles a day - the perfect amount of daily driving for a Model S.
Even if we assume that a taxi company uses Toyota (NYSE:TM) Prius taxis, the Model S provides 50% in gas cost savings over a Prius. At 50mpg and 70,000 miles that is 1400 gallons of gas. That represents a savings of 5000$ a year at the minimum, much more where gas is expensive. If Supercharging is used sometimes these savings could easily go up to $7500. Over 8 years, the car would easily payoff much more than the premium over the price of a Prius. The Model S is much larger than a Prius. Compared to a gas car of its own size, the Model S would represent savings of at least $15,000 every year without even considering Supercharger use.
These calculations are for the US. In China, gas is more expensive (~5$/gallon) and electricity is cheaper and the savings will only be higher.
It is no wonder that Chinese media is reporting massive fleet sales in China with several companies making orders for 100 Model S' and one even for 1000 (source is in Chinese). Additionally it also seems that there are orders for about 100 third party modified convertible Model S'. There is also an active grey market (pictures in Chinese source) for imported Teslas in China.
In conclusion, these are all major positives for Tesla in China and going forward I expect Chinese demand to easily outpace North American and European demand. It is easy to see why the Tesla China website crashed as soon as Tesla started deliveries.
I'm bringing this news to you here first so you can take the opportunity today to buy Tesla at or under $200 before the news hits mainstream American media.
Disclosure: I am long TSLA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.