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Tesla Makes China Second-largest Market for Model 3 Car

| May 01, 2016 10:23 PM EDT

Chinese orders for the Model 3 car have reportedly increased, making China the second-largest market for Tesla's mass-market electric car.

U.S. carmaker Tesla has made China its second-largest market for its first mass-market car Model 3, with the company receiving more than 400,000 orders worldwide in a month, the South China Morning Post reported.

Tesla's global vice president Robin Ren said that Chinese customers recognized the value of high-performance electric vehicles, as shown by the surge in orders.

"The potential is huge, and Tesla is fully committed to developing the Chinese market," Ren said on Thursday, April 28.

Last year, China was also the company's second-largest market despite the drop of 33 percent to $319 million (HK$2.47 billion) from the previous year's revenue.

Tesla launched Model 3 on April 1 but the online pre-order had stared a day earlier. The car's first model, which was aimed at the mass market, is priced at $35,000. For Chinese customers, they have to pay a deposit amounting to 8,000 yuan (HK$9,570).

In the North American market, Tesla plans to make its first deliveries by the end of 2017, while Chinese buyers will receive their orders even later.

Since China is the world's largest car market, Ren said they have a long-term commitment for the country.

"Our mission is to promote the use of electric cars in the world, this cannot be achieved without our presence in China," he added.

Analysts, however, are not confident about the sales of Model 3 in China.

"As the infrastructure for new-energy vehicles (NEVs) is not mature enough, customers will prefer cheaper models. Although Model 3 is claimed to be an affordable one, the price is still too high," Zhang Yu, an analyst at consultancy Automotive Foresight, said.

"It may manage to draw people's attention, but Model 3 won't be able to be a game-changer in the Chinese market," he said.

The sales of new energy vehicles (NEVs) have quadrupled to 330,000 cars last year due to government policies and subsidies that support NEVs.

Tesla's head of global sales and service Jon McNeill told state-controlled CCTV on Thursday, April 28, that they are expecting China to become the largest electric car market in the world.

McNeill said they plan to set up Tesla's first plant in the country as they continue to raise their production capacity to deliver Model 3 on time.

At the Beijing auto show on April 25, Tesla also launched Model X, a seven-seater sports utility vehicle (SUV) model, to anticipate the country's growing SUV market.

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