Musk in Motown: The need for electric cars is urgent

Tesla lower on China sales drop

Elon Musk returned to Detroit on Tuesday afternoon saying he wants to promote the development of electric vehicles.

Despite plunging gas prices, Musk said, "The need to transition to electric cars is urgent."

His appearance at the Automotive News World Congress marks the first time Tesla's CEO has been in Detroit since 2013. Since then Musk and America's auto dealers have been fighting with each other state-by-state as the dealers and politicians try to limit Tesla's ability to sell directly to customers.

The dealers have had some success, most notably in New Jersey where lawmakers passed a ban on direct sales of autos. But they haven't stopped Tesla from growing sales.

Elon Musk, co-founder and chief executive officer of Tesla Motors Inc.
Noah Berger | Bloomberg | Getty Images

Tesla does not break out sales in the U.S., but the website InsideEVs estimates Model S sales last year in the U.S. reached 16,500 to 18,000, while Tesla's total global sales climbed to a projected total of 33,000 to 35,000 vehicles.

Longer range, Musk said Tesla will continue driving toward higher volumes.

"We should be able to produce a few million cars a year by 2025," said Musk.

That's not to say there aren't challenges. Musk said Tesla's sales declined significantly in China during the fourth quarter, although he declined to quantify the slide. The CEO called the slowdown a short-term issue and blamed it on misconceptions among Chinese consumers about the difficulty of recharging electric vehicles.

The sales drop in China was first reported by Dow Jones.

Tesla shares fell about 5 percent in after-hours trading on the report.

Closer to home, the truth is that Musk and Tesla continue to confound many in Detroit.

Some find Musk's attitude toward the auto industry arrogant, and they are quick to dismiss him.

But when you talk with executives inside the Big Three, they admit Tesla is an automaker worth watching carefully.

In fact, when GM unveiled its Chevy Bolt concept car at the North American International Auto Show in Detroit, the price target was squarely aimed at competing with Tesla's next vehicle, the Model 3.

Chevy Bolt: The affordable alternative to Tesla?

The Bolt will offer up 200 miles of fully electric driving on a single charge at a price of $30,000, after the $7,500 federal tax credit. On Tuesday, Musk said he doesn't believe the Bolt will pose a competitive threat.

So far, Musk has given few details about the Model 3 aside from saying its price target will make it attractive to the mass market in the mid-$30,000 range.

As for whether Tesla would ever franchise dealerships to sell its vehicles, Musk said, "At some point we would consider adding franchise dealers, but we first need to establish our own stores."