Analyst: Tesla Model 3 Won't Be 'A Game-Changer' In China

Tesla Motors Inc TSLA’s new Model 3 has logged more than 400,000 global pre-orders in about a month since its highly-anticipated unveiling. China is Tesla’s largest international market, generating $319 million in revenue last year.

However, the Model 3 may not have the same kind of game-changing potential in China that it could have in the U.S.

“As the infrastructure for new-energy vehicles (NEVs) is not mature enough, [Chinese] customers will prefer cheaper models,” Automotive Foresight analyst Zhang Yu explains.

Although the Model 3 is expected to be much more affordable than previous Tesla models, Yu says it won’t be cheap enough for the Chinese mass market.

“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 concludes.

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Tesla’s head of global sales and service Jon McNiell expects China to become the largest electric car market in the world. It remains to be seen just how much of that market Tesla will be able to conquer.

Last quarter, General Motors Company GM generated $579 million in income and strong growth from its joint ventures in China. GM is set to begin shipping its answer to the Model 3, the Bolt EV, later this year.

Disclosure: the author holds no position in the stocks mentioned.