Tesla can't catch a break in China

A customer checks a BYD e6 electric car at a dealership in Beijing. © Reuters

 With an estimated 250,000 electric cars that made their way to dealers' lots in 2015, China is poised to displace the U.S. as the world's largest emission-free vehicle market. Yet, to Tesla, the California-based electric car pioneer, China is a contradiction.

     "We are still doing reasonably well in mainland China, but we do face quite [a] high import duty, and we do not yet have access to local incentives," Chief Executive Elon Musk said here at an event on Monday. "The obstacle for our cars in mainland China is much greater than it would be, actually, anywhere in the world."


     Musk said Tesla is still in the process of exploring options to build cars in China, adding that any updates on Chinese partners or factory locations will hopefully come by the middle of this year.

     Tesla reported that it had sold 3,025 cars in China through the first nine months of 2015 -- grossly missing its target of 10,000 units, set a year ago. The frustrating results have prompted Musk to trim his China expectations: This year's indicator of success will be sales of 5,000 units.

     The quarter through September was Tesla's best ever in China since it forayed into the market in 2014. The company managed to sell 1,345 sedans across the country during the period, 11% of Tesla's global deliveries during the term.

     In stark contrast, BYD, Tesla's strongest competitor in China, delivered 5,749 "new energy" vehicles on its home turf in September alone. The result marks a threefold year-on-year increase as sales of its plug-in hybrids, such as the Qin and Tang, gained further traction on the back of government support for the country's new energy vehicle industry.

     Globally, BYD said it sold 61,722 plug-ins last year -- a result that catapulted the Shanghai-based company to No. 1 among electric carmakers. With only a tiny number of exports to minor markets like Costa Rica, the majority of BYD's passenger vehicle sales are made in China.

     Tesla said it delivered 50,557 vehicles worldwide in 2015.

     Earlier this month, BYD, backed by Warren Buffett since 2008, elevated its earnings forecast for 2015 to 2.85 billion yuan ($433.2 million), from last year's 433.5 million yuan. Chairman Wang Chuan-fu attributed the fivefold acceleration to "explosive growth" in China's new energy vehicle segment.

     "Although the company's new energy vehicles production is running at full capacity," Wang said in a statement, "it still cannot meet the enormous demand of the new energy vehicle market."