Tesla's Move Into China Could Make It An International Powerhouse

Tesla Motors just delivered its first 12 cars to China as the electric vehicle company gears up to make inroads in the world’s largest car market.

Elon Musk has been on a publicity tour around China over the last few days, and today, Tesla execs are showing off the Model S at the China International Technology Fair. The first 12 cars were sold to economic elites: soccer team owners and business execs. But a mainstream invasion should soon follow.

Tesla's debut in China a big deal for a couple reasons: The country is home the world’s largest car market, with more vehicles sold annually than in the United States and Japan combined. It’s also, like the United States, a huge country with a heavy reliance on fossil fuel. Musk has announced plans to start building out supercharging infrastructure in China, much like he has in the United States. And, most importantly, if everything goes according to plan, Musk plans to begin manufacturing the cars in China rather than just importing them, he told local media earlier this week.

“At some point in the next three or four years we’ll be establishing local manufacturing in China,” he said. “We’re going to make a big investment in China in terms of charging infrastructure.”

A successful push into China could be huge for the company, which is critically acclaimed but still has a long way to go before it starts selling electric cars at anywhere near the volume major manufacturers like Ford, Chevrolet, Honda, and Toyota do.

Telsa recently announced its "Gigafactory," a manufacturing center that will scale up the production of the lithium ion batteries the car uses. That'll help the company achieve its goal of "producing a mass market electric car in approximately three years," but if most of those cars are shipped overseas, it doesn't help push up the company's market share in the US. Now, if Tesla begins manufacturing cars worldwide, it can keep the cars it makes in the United States in the United States and can focus on its Chinese operation as a separate entity.

China, with a booming middle class that can afford the luxury vehicle, seems ready to go nuts over the car. Doug Young, an American living in China who follows the tech industry for Reuters and Forbes, recently told Forbes that the buzz surrounding the company in the country has been impressive.

“I honestly haven’t seen this kind of media frenzy and hype surrounding a product launch for at least a year or two, back when Apple was still at the height of coolness in China,” Young wrote. He suggests that China could “become the company’s biggest global market as soon as next year,” and that the company is poised to sell as many as 5,000 cars by the end of this year.

Happy to celebrate Earth Day by delivering our first Model S's to China. #HappyEarthDay https://t.co/XdzJPRcmUQ

— Tesla Motors (@TeslaMotors) April 22, 2014

That’s good news for Musk, who is slowly watching legislators put up legal hurdles for the company to jump over in order to sell his cars in the US. So far, New Jersey and Texas have banned the company’s direct-to-buyer business model, which Musk insists is necessary in order to keep the company financially viable.

Overseas, Tesla has sold cars to people in 37 countries and operates stores in the United States, Canada, United Kingdom, Switzerland, Sweden, Norway, Netherlands, Luxembourg, Italy, Germany, France, Denmark, Belgium, Austria, Japan, Australia, and, now, China and Hong Kong. Its first Chinese store is in Beijing.