Hong Kong’s electric car market, currently dominated by Tesla Motors, is likely to see intense competition going forward as several luxury car makers will join the game, an analyst says.
Steve Man, Director of Research Asia for Autos and Industrials at Bloomberg Intelligence, said in a media briefing last week that he expects Germany brands such as Audi, Porsche, BMW and Mercedes to all have their e-vehicles in the market by 2018.
The German luxury car makers will pose a threat to Tesla, given their huge experience and deep understanding of customer needs and their knowledge of vehicle safety issues, he said.
US-based Tesla currently has 80 percent share of the electric car market in Hong Kong, with the rest taken up by players such as Japan’s Nissan Motor and France’s Renault Group, according to Man.
“Tesla is aware of the risk. That’s why they want to move to down-market by launching the Model 3,” the analyst said. “The mass-market is much bigger than the high-end one.”
Last year, Tesla started selling Model X, offering some signature vehicles for up to US$150,000 per unit. The least expensive Model X, namely 75D, costs about US$84,000.
The company recently lowered the price of its Model X sport-utility vehicle, namely 60D, to US$75,200, aiming to tap the demand in the mid-end market.
In late 2017, the California-headquartered car maker will deliver its Model 3 with a starting price as low as US$35,000.
In April, Tesla — which was founded by Elon Musk, who is the inspiration for the Tony Stark character in the Iron Man movies — announced that it sold 14,820 e-cars worldwide in the first three months of this year, lower than the expected 16,000 units.
The company blamed the weaker-than-expected sales on shortage of parts.
With tax waivers in Hong Kong, Tesla’s electric cars are actually cheaper than other comparable luxury vehicles, Man said.
Although Tesla 90D has a driving range of 509 kilometers, which is shorter than Mercedes E400’s 800 kilometers, buyers can enjoy tax waivers and just need to pay HK$846,400.
Meanwhile, one will need to pay HK$941,000 for a Mercedes E400, which is priced at HK$463,663, if registration fee is included.
Also, energy cost of Tesla 90D is HK$3,000 per year while that of Mercedes E400 is about HK$20,000, Man said.
“If there wasn’t a Tesla, luxury brands such as Audi, BMW and Mercedes will not be that aggressive in bringing out e-vehicles,” he said.
Key automobile makers have no choice but to follow Tesla’s footstep and develop auto-piloting system despite a recent fatal traffic accident in the US involving a Tesla Model S, the analyst said.
Tesla may face some tough investigations but stricter regulations can actually help the car sector establish an industry standard, Man said.
“It is hard to get mass adoption when there is no common standard,” he pointed out.
On May 7, a 40-year-old man died in his Tesla Model S as it crashed into a truck on a Florida highway while in autopilot mode.
Commenting on Chinese car makers, Man said it will take some time for them to be able to compete with global players in Hong Kong.
“Chinese auto-makers have still a lot of work to do in terms of building their reputation,” he said. “It is hard for buyers who are used to German or Japanese cars to try Chinese vehicles.”
Battery life is another challenge for Chinese firms such as BYD Co. (01211.HK).
Some Hong Kong taxi drivers have said that they won’t try BYD’s e-6, as the vehicle won’t allow them to finish a whole work shift on a single charge.
The drivers fear that if they need to charge the vehicle mid-shift, they’ll lose money due to the idle time, Man noted.
Audi expects sales rebound in HK, Macau next year (July 18, 2016)
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