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Tesla Motors Inc (TSLA): Elon Musk’s Love Affair With China Grows

Tesla Motors Inc (TSLA) Model X

Tesla Motors Inc CEO Elon Musk has been in Hong Kong this week attending StartmeupHK Fest, an event focused on the growing entrepreneurial community in the city. Clearly, Tesla Motors CEO has begun a love affair with China and Hong Kong in particular. It’s easy to understand Musk’s fondness for China as the region could be key to the long term success of Tesla Motors Inc .

Elon Musk SolarCity Corp (NASDAQ:SCTY)

Musk was the featured guest at the closing session of the StartmeupHK Venture Forum.  Seated in a casual living room setting, he was interviewed by CNN International correspondent Kristi Lu Stout. Musk is convinced that Hong Kong has the potential to become one of the worlds major hubs for EV growth.  Musk said: “I actually think that Hong Kong will probably be the leading city in the world for electric cars… It’s going to be really a leading light because I think it will actually have more EVs per capita than any other city.”

At a press conference earlier in the week Musk said “Hong Kong is a beacon city for electric vehicles, [it can] serve as an example to the rest of the world on what to do,” reported the South China Morning Post. “I currently do not foresee any city exceeding Hong Kong. It will be the leader of the world,”

Tesla leads in Hong Kong EV Sales

Musk referenced fabulous growth in EV ownership in the city telling the crowd that between 2014 and 2015, the number of registered EVs rose by 270%. Musk said that there are around 4,000 electric vehicles on the streets of Hong Kong right now and that the majority of those are the Tesla Model S.  The firm sold 2,221 Model S Sedans in Hong Kong in 2015. Tesla Motors hopes to begin shipping the Model X, SUV to China sometime this year.

Tesla Motors Inc (TSLA) Model X

Hong Kong has something exciting to look forward to with the Model X. The Tesla SUV began shipping in the US just as the 4th quarter of 2015 came to a close after many delays.  Tesla began taking deposits on the car way back in February of 2012.  Those who have taken delivery of the car have nothing but good things to say about it.

China is Crucial to Tesla’s Long-term Success

Electric vehicles are getting a lot of media coverage in the U.S. but China is the worlds largest EV market. China needs electric vehicles to combat the pollution cause by the tyrannical traffic jams of its congested cities. In fact, China bought about three times more plug-in electric vehicles than the United States in 2015.

Recent news has Tesla looking for a partner in China who would join forces to build a factory and produced their cars on China’s mainland. A partnership and a local partner would allow Tesla Motors to be eligible for government incentives which would help drive down costs for the company and for buyers of Tesla EVs.  Tesla may also consider building a Gigafactory in China as well.  This would make sense as the batteries manufactured in a Gigafactory are a foundational component in their EVs.

Musk said, “Quite frankly China is well developed, has better highways and better trains than the United States by far. The challenge for Tesla in China is we need to establish a local partnership.” Musk would like to have that partner in place and a location for a factory sometime this year.  He’d like to see the company producing vehicles in China by 2020.

Tesla is Building Stores, Service Centers  and a Vibrant Supercharger Network in China

As discussed above, China is a key market for Tesla Motors and the firm is making all the right moves to get a strong foothold in the country. Tesla has 15 stores in 7 Chinese cities with plans to continue opening more stores this year.  Tesla stores are typically located in popular malls in major cities.  One or two vehicles are displayed on the showroom floor and vehicles are available for test drives.

With the growing demand for Tesla EVs in China comes a growing demand for charging solutions.  The Tesla Supercharger is the current answer to the need.  The company has already built 340 Supercharger stations in China including 10 in Hong Kong.  Superchargers can add significant range to the vehicles very quickly.  Most “fill-ups” take around 15 minutes. Another 1,600 destination chargers are available to Tesla Motors owners in China.  Although not as fast as a Supercharger, they are less expensive to install and a great second option for charging on the road.

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