Tesla’s Musk: Ripping Off Customers Isn’t Good Strategy

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Tesla’s (NASDAQ:TSLA) recently publicized decision to offer the Model S sedan in China for around the same price as the equivalent American model — with the added taxes and transport fees — may lead to great things in the world’s largest car market, and CEO Elon Musk is naturally quite upbeat about the car’s prospects there.

After China’s abundant added tax for imported vehicles, and the $3,600 transportation fee, Tesla’s 85 kWh — the more potent of the two battery pack options — Model S will sell in China for about $121,000, or 734,000 yuan. While it seems like a lot, Tesla notes that it could have charged much more, but it was taking a risk to make the Tesla as affordable as possible in a country that hasn’t historically been very welcoming of electric vehicles.

Musk isn’t letting China’s fuzzy alternative fuel history dictate the chances for the Model S, though. For Tesla, “it could be as big as the U.S. market, maybe bigger. I don’t want to get overexcited about it,” Musk told Bloomberg on Wednesday. “Even without building there locally, it’s always going to be the second-biggest market after the U.S.”

Provided that Tesla’s entry into China goes over rather smoothly, Musk believes that Model S shipments to China can match U.S. sales by 2015. “It’s not my firm prediction — it’s more like a low-fidelity guess,” he said, hedging his statement. Still, Musk has proven that betting against his “guesses” and statements can be costly.

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