Though electric car maker Tesla Motors recently laid off around 200 of its 600 employees in China due to poor sales, Tesla CEO Elon Musk is undeterred in China and plans to localize production in the country.
“We have a strong long-term commitment to China, and we tend to establish both local production and local engineering in China,” Musk told Xinhua, adding that localization could take place within three years.
Until the company establishes production in China, it will continue to ship its cars from its United States production plant, which still is not at full capacity, according to China Daily.
Once the U.S. factory reaches full capacity, Musk says it is “just the sensible logical thing [to] localize production in China for the Chinese market, in Europe for the European market.”
Since first taking orders in China in mid-2013, Tesla has been beset by problems in the country. Musk revealed that speculators and scalpers led the company to believe that demand was very high in China. Many of those speculators cancelled their orders once the cars arrived, which has led to excessive inventory in China.
“China is the only place on Earth that we have excess inventory. We are essentially selling cars that speculators ordered but we are not able to take delivery on,” Musk said.
Tesla will take a long-term approach to China with a focus in the near-term on expanding its super-charging network and increasing its stores and service centers in the country, while focusing on its core customers. “Charging anxiety” is the biggest concern among Chinese customers, and Musk wants to address that by providing all customers in China with mobile adapters, which allow for charging anywhere.
The company is also improving its in-car maps and navigation functions, and will integrate traffic-based routing into the system within the next few months.
“It is clear that we need to think of China in a very long-term way. We need to steadily boost the confidence of the Chinese consumers,” Musk said.
“China is attractive right now, and in long term.”
image credit: tesla motors