On the Chinese calendar, 2014 is the year of the horse. On the roads of China, it could be the year of the Model S.
After a slow start in the country, Tesla is taking orders in the world's largest car market and hoping to cash in on two trends that favor the automaker:
- The Chinese have a voracious appetite for luxury cars.
- High air pollution levels mean the government has a major incentive to push clean-running electric cars.
"I think the China story is a huge one," said Matthew Argersinger, senior analyst at The Motley Fool. Tesla is "going to sell 10,000 to 20,000 beginning in a couple years, and that's a huge incremental increase in production."
The automaker is now taking preorders on its Chinese website, Tousule.cn, for the Model S—which costs $41,000 to reserve—and the Model X. The site's launch comes just a month after Tesla opened its first location in China.
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Between that showroom in Beijing and the dedicated website, the automaker has laid the groundwork for deliveries of the Model S in China early next year.
The question now is how many cars will Tesla sell there.
A convergence of factors
Earlier this year, when CEO Elon Musk was asked about international demand for the Model S, he admitted he wasn't quite sure what to expect.
"I think we could eventually sell 10,000 a year in Europe and 5,000 in Asia," he said.
Tesla is expected to perform well in China because it has a number of the ingredients needed to create a surge in sales.
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One is its position as a luxury brand, and China will soon be the world's largest market for luxury autos. The Chinese have an intense appetite for high-end cars and SUVs, which is why BMW, Mercedes-Benz, Cadillac and Audi are rapidly expanding their showrooms in the country.