Tesla Motors, Inc. TSLA has started the commercialization of its electric car, the Model S, in Mexico. Customers can book the vehicle through the automaker’s website for a payment of 80,000 pesos ($4,701.2). The prices of Model S for the country are expected to start from $75,000 plus taxes, according to sources.
Tesla's decision to begin operations in Mexico was based on the interest of the country’s government and sustainable transport. In addition, Mexico City is one of the major luxury markets. Mexico's automotive industry is a mature, dynamic market, which has been witnessing continuous growth. In 2014, light vehicle production reached a new historical record of 3 million vehicles. The Mexican automotive industry is expected to expand in the future and reach a production level of 4 million units by 2018 and 5 million by 2020, according to Mexican Automobile Industry Association (AMIA).
Tesla is also reportedly planning to expand its Superchargers network in Mexico to facilitate longer trips. The automaker further aims to open a formal store in the country by the second quarter of 2016. Earlier this year, Tesla declared that it will commence operations in Mexico from the latter half of the year. Tesla thinks that Mexico’s automobile market offers substantial demand for both new and used vehicles. Hence, after the establishment of service centers and Superchargers, the country may import a wide range of used Tesla vehicles.
Tesla’s Model S, featuring advanced technology, can reach 0 to 100 km / h in just 3 seconds and up to 425 kilometers without recharging. The automaker improved the car’s safety features by adding three layers of protection under the battery pack, which, it believes, will reduce the safety risk due to any underbody impact to almost zero. In Mar 2015, Tesla added Automatic Emergency Braking, Blind Spot Warning and Side Collision Warning to Model S via a software update, further increasing its safety.
Tesla is actively undertaking international expansion. The company started the delivery of Model S in Europe in Aug 2013 and in China in Apr 2014. The electric carmaker also started taking orders for Model S and Model X in Japan in Nov 2013. Tesla launched the right hand drive (“RHD”) Model S in the U.K. in June and in Hong Kong in July. Further, it started delivering vehicles in Australia and opened its first retail store and service center in the continent in Dec 2014. Additionally, Tesla plans to start manufacturing cars in China over the period 2017–2018. This will help it to avoid the 25% import tariff imposed by China, thus reducing car prices in the nation. Also, this will likely boost sales. Tesla's global operations will expand further with the opening of new stores and service centers, and the expansion of the Supercharger network.
Additionally, Tesla intends to expand in India, which is gaining market share and is expected to become the third-largest automotive market in the world. However, the high price range of the company’s vehicle is a major impediment. Moreover, there is energy shortfall issues in India. Thus, an electric vehicle is not likely to find too many takers there. Hence, Tesla is designing an affordable sedan, code-named ‘Tesla Model 3’ for emerging markets. In addition, the automaker is reportedly planning to launch a cheaper version of Model S in India and also looking to build an assembly plant in the country.
Currently, Tesla carries a Zacks Rank #3 (Hold). Better-ranked automobile stocks include O'Reilly Automotive Inc. ORLY, U.S. Auto Parts Network, Inc. PRTS and Fox Factory Holding Corp FOXF, all carrying a Zacks Rank #2 (Buy).
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