Tesla Motors, Inc. (TSLA) announced that it will be manufacturing cars in China in the next 3 to 4 years. The company is also beginning the delivery of Model S in the country this week. Tesla started taking reservations of the Model S in China as of Aug 2013.
Tesla’s initiative to manufacture in the nation is likely to help it in long run. The 25% import tariff charged on vehicles sold in China can be avoided once local production commences. This will slash vehicle prices in the nation, and will likely boost sales. Model S is priced at $118,000 in China, inclusive of shipping charges, value-added taxes and import duties. Tesla is also working to attain China's electric-car subsidies which will help offset these additional costs.
Tesla is focused on expanding in the world’s largest automobile market, China. The company is also planning to establish new stores and service centers in the nation. Additionally, the automaker has plans to construct battery charging stations in the country, and superchargers in Beijing and Shanghai.
Tesla plans to inaugurate 10 to 12 stores in China by the end of 2014, one of which is its flagship 800-square-meter store in Beijing which was opened in Nov 2013. The electric carmaker expects China to account for 30–35% of its global sales growth in 2014.
Tesla currently carries a Zacks Rank #4 (Sell).
Some better-ranked automobile stocks worth considering are Toyota Motor Corp. (TM), PACCAR Inc. (PCAR) and Fox Factory Holding Corp. (FOXF). Toyota sports a Zacks Rank #1 (Strong Buy) while PACCAR and Fox Factory carry a Zacks Rank #2 (Buy).
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