Tesla (Nasdaq: TSLA) Has a Huge Future in China

In a public event today (Tuesday), Tesla Motors Inc. (Nasdaq: TSLA) Chief Executive Officer Elon Musk hand-delivered China's first Model S sedans to customers in Beijing.

The event marks Tesla's entrance into a country that has been viewed as a potential game changer for the electric-vehicle pioneer.

China has announced it wants 500,000 electric and plug-in hybrid vehicles operating in the country by 2015, and 5 million by 2020. China's huge demand would go a long way toward Tesla achieving its goal of producing 500,000 vehicles per year by 2020. By comparison, the company expects to produce 1,000 vehicles per week by the end of 2014.

Unfortunately for both parties, the country is far from achieving those goals. According to the data consultancy firm Automotive Foresight, only 11,410 electric vehicles and just over 1,000 plug-in hybrids were sold in China in 2013.

A lack of charging stations in China is seen as a major hindrance to Tesla sales – but a problem Musk is determined to solve. Tesla and Musk are working now to create a large "network" of charging stations similar to what the company has constructed in the United States.

"My instructions to the team are to spend money as fast as they can spend it without wasting it," Musk told reporters in Beijing Tuesday. "In dollar terms I think over time we'll probably end up investing hundreds of millions of dollars in charging infrastructure in China."

Before his trip to China, Musk also told reporters that the company plans to begin manufacturing vehicles in China within the next three or four years. That would cut down on the price Chinese consumers pay for the Model S sedans.

"At some point in the next three or four years we'll be establishing local manufacturing in China," Musk said. "China is very important to the future of Tesla."

Tesla began allowing preorders in China of Model S sedans in August 2013, and the company has been charging $118,000 for the luxury vehicle in China. That's about 50% higher than the base retail price in the United States, and the company has attributed the increase to "unavoidable taxes, customs duties and transportation costs."

The move into China is a huge step forward for the company, as the country is a major key to the company's and TSLA stock's success moving forward…

Join the conversation. Click here to jump to comments…