The waiver of purchase tax on electric vehicles in China is expected to boost Tesla Motors, Inc.’s (TSLA) sales in the world’s biggest automobile market. The Chinese government recently announced the waiver of a 10% purchase tax on domestic and imported electric, plug-in hybrid and fuel-cell vehicles from Sep 2014 to Dec 2017.
The country is trying to increase the popularity of electric cars to reduce the pollution level of its cities as well as increase energy independence. China already offers significant subsidies on purchase of electric cars and has limited the number of gasoline vehicles that can be sold in some cities, in order to check pollution.
The move will immensely benefit Tesla as it is aiming to achieve high sales volume in China, where it started delivering vehicles in Apr 2014. The company is also planning to open stores and service centers as well as establish a Supercharger network in the nation. The electric carmaker plans to have total 10 to 12 stores in China by the end of 2014, one of which is its flagship store in Beijing that was opened in Nov 2013.
Tesla expects China to account for 30–35% of its global sales growth in 2014. It expects sales in Europe and Asia to be double the sales in North America by the end of 2014. Additionally, Tesla plans to start manufacturing cars in China by 2017–2018.
In a separate news development, Tesla revealed that its Supercharger network provided over 1 GWh of energy to Model S vehicles in June, which is a new record for the electric carmaker. Tesla’s Model S vehicles can cover about 3.7 million miles using this amount of energy. This means that Model S vehicles helped save around 168,000 gallons of gas and prevented the emission of 4.2 million pounds of carbon dioxide during the month.
In total, over the years, Tesla’s Superchargers have provided enough energy to cover 24.7 million miles, which helped save 1.1 million gallons of gasoline as well as the resultant pollution. These Superchargers are industrial grade, high-speed chargers that can revive 50% of the battery of a Model S in 20 minutesand provide full charge in 75 minutes.
Tesla currently carries a Zacks Rank #3 (Hold). Some automobile stocks worth considering include Meritor, Inc. (MTOR), China Automotive Systems Inc. (CAAS) and Gentex Corp. (GNTX). All these stocks sport a Zacks Rank #1 (Strong Buy).
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