This morning the Wall Street Journal is reporting that Tesla sales in Hong Kong plummeted in April goo.gl/BgVsXS
The drastic drop is the result of an end to government tax breaks and two key points can be clearly gleaned from this information. goo.gl/wQjH24
First and foremost one realizes just how important subsidies are to Tesla sales. With the United States as by far it's largest market and the expected end to federal tax breaks on Teslas some time in 2018, one must ask what will happen to sales of ALL MODELS of Tesla when the tax incentives end. Elon Musk has spoken of the importance of running his production lines at design capacity for acheiving projected profitability.
If the Hong Kong data is any indication, many of those who put down a reservation for a Model 3 are hoping to get their vehicle ahead of the end to U.S. tax break. What will happen to backlog & sales when Tesla has to inform those with pending deliveries that they will not get the tax break? Especially for Model 3 buyers who are clealy more cost conscious.
The second and more immediate point to be made is the pull forward of nearly 3000 vehicle sales in Hong Kong in the first quarter (2939 Teslas were registered in Hong Kong in March after the end to the tax break was announced compared to an average monthly registration of 251 vehicles per month in the last half of 2016). Would Tesla have even met it's first quarter sales projections were it not for the Hong Kong pull forward?
There are many factors involved in deciding to to purchase an electic vehicle, for early adopters, price is not high on that list. As competition mounts and subsidies end will Tesla be able to sell all of those Model S, X, and 3 when the economics of buying a Tesla become much worse? Time will tell. And we still have to ask if Teslas first quarter sales were really that good given the big one time boost from Hong Kong.