Apr 23, 2014 05:41 PM

Recharging Network Is Priority over Production in China, Tesla CEO says

(Beijing) — Tesla Motors Inc. would need to solve problems it faces in China with recharging infrastructure and service before starting production in the country, Elon Musk, CEO of the U.S. electric carmaker, said on April 22.

Musk was visiting China just as consumers in the capital and Shanghai got their hands on the company's cars for the first time. The company's flagship Model S was introduced to China in January, when buyers could place early orders. Consumers in other parts of China are not able to get the cars yet.

This delay is necessary to ensure a good experience for customers, Musk said in an interview with Caixin.

"If they're too far from a service center and the charging is not sorted out, then they will not have a good experience," he said.

Musk said the company will invest heavily to establish a charging network in the country as soon as possible.

Working with the electricity grid companies might be difficult, said Li Yuheng, a researcher at CIConsulting. Power transmission in the country is controlled by a state-owned duopoly.

Musk said connecting to the grid would be energy-efficient even though Tesla could build charging facilities powered by solar panels.

"It's possible for us to make the charging stations completely independent of the grid," Musk said. "However, it's usually still advantageous to connect to the grid because there are times when we'll produce excess energy that we can then provide back to the grid."

Tesla's goal in the country is to produce cars locally and build an engineering and development center in China in three to four years, Musk said.

"It's not going to make sense long-term to be transporting cars from California to China," he said.

The Chinese government requires foreign car companies that want to build autos in the country to set up joint ventures with Chinese partners, but Musk said it is too early to talk about a plan.

"We're not engaging in those discussions right now because we're so small as a company," he said. "One needs to crawl, then walk, then run, and we're still in the crawling phase."

In addition to reducing production and tariff costs, manufacturing locally also means Tesla might get on the central government's list of e-car companies that are eligible for subsidies. Right now, each buyer who picks a car from the list of approved companies gets 60,000 yuan from the government.

"I would certainly hope and request that Tesla have access to these incentives, with the clear understanding that we're going to do local production long-term, but it's too early for us to do it now," Musk said.

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