Many Applaud Tesla Motors (NASDAQ:TSLA)’s Entrance in Hong Kong

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By Stefan Larson on September 26, 2014 Company, Consumer Staples

Tesla Motors (NASDAQ:TSLA), has started to lay more focus on Hong Kong’s car market since the car manufacturer is getting a very health response through speedy reservations for its luxury electric sedan Model S in China. No doubt, Chinese government is highly inclined towards its domestic companies and is quite generous with incentives and subsidies to support local industries. The question still remains in doldrums whether Tesla Motors (NASDAQ:TSLA) will be able to get same kind of subsidies in China. Against all odds, Tesla Motors (NASDAQ:TSLA) has embarked upon an expansion plan in Hong Kong by doubling their workforce. Hong Kong’s government website has indicated that in an endeavor to accomplish the long term objective of providing the city with a sustainable transportation, the US electric car manufacturer has carried out an expansion in its Hong Kong squad.

Further details have also been released by Veronica Wu, Tesla Motors (NASDAQ:TSLA) spokeswoman; she said that by the end of the current year the number of employees will be increased from 50 (at present) to more than 100. In Hong Kong, Tesla Motors (NASDAQ:TSLA) made its presence felt in 2010 by setting up a modest office, however, after positive market response, the company has recently established a much larger office of more than 10,000 square feet in Tsuen Wan area.

Tesla Motors (NASDAQ:TSLA) has also confirmed hiring of Hong Kong’s Country Director. Thus the company has placed its confidence in Hong Kong’s market as indicated by Wu that the city has full potentials to present a model of successful launch of electric cars to the rest of Asia. She appreciated Hong Kong’s government’s openness towards the idea of electric cars and their passion for sustainability in the longer run. Wu further expressed Tesla Motors (NASDAQ:TSLA)’s desire to make Hong Kong the Norway of Asia. In Norway, Tesla Motors (NASDAQ:TSLA) is enjoys a substantially large market since the Norwegian government has given large incentives there that offset the cost of the cars.

Charles Ng, Hong Kong Associate Director-General of Investment, showed his satisfaction at the recent trends in which not only a large number of small entrepreneurs have started moving to Hong Kong for global expansion of their businesses, but big market players like Tesla Motors (NASDAQ:TSLA) have established their foothold in the city and started to achieve growth by taking advantage of Hong Kong’s exclusive business environment.

According to a report by Goldman Sachs analyst, there are about 4000 reservations and down payments till mid September in China for Tesla Motors (NASDAQ:TSLA) cars. These positive indications have encouraged Tesla’s CEO Elon Musk to set a production target of half a million cars by 2020, as soon as a battery gigafactory will start full production.

However, according to Barclays analyst Brian Johnson, Tesla Motors (NASDAQ:TSLA) is currently facing challenges in meeting its 4^th quarter (4Q) target of about 13,000 cars. Even with the possibility that the deliveries in North America will register rise and some improvement in Europe, Tesla Motors (NASDAQ:TSLA) needs between 5,700-6,300 units as compared to 2,000-2,200 units in 3Q to be delivered in Asia to meet their 4Q target; however this would depend on how the Asian, especially the Chinese market responds.