When Elon Musk came to Detroit yesterday, people expected announcements of new Tesla cars, because that’s what car companies usually do at the Detroit Motor Show. Tesla proudly is unlike any car company, so Elon Musk talked about trouble in China, and he did what car companies usually are loath to do, he blamed the stupid Chinese customer. Sales in China are “a little weaker,” Musk said, because “there was a misconception that charging was difficult in China.” The misconception part was right on, the rest wasn’t. Elon Musk so far has misconceived both the dangers, and the opportunities of the Chinese market.
Let’s clear up the misconception about the charging. The customer is right, it IS utterly difficult to charge an EV in China. When the government-owned China Daily asked an official in charge of promoting new-energy vehicles in Beijing why EVs don’t sell, the paper was told that “the lack of charging infrastructure is the major culprit.” Never mind the grand announcements of a few hundred charging stations here, and a few hundred there. First off, this is China, and announcements more often than not remain announcements.
Wikipedia, not that it is the last word on the matter, found a total of 100 working charging stations in all of China, along with 35,000 under construction, and planned, and 220,000 proposed. The same Wikipedia (again, not the last word in statistics) found 11,565 functioning chargers in the U.S., where many still complain that the U.S. network is grossly insufficient, and a hindrance to the proliferation of the electric vehicle.
Then, China has a population of 1.35 billion (or 1.5 billion, or 1.6 billion, no-one really knows.) Applying the U.S. ratio of chargers to the Chinese population, the country would need 50,000 functioning chargers now, ready to be counted by Wikipedia. Truth be told, China would need a lot more. Read the next chapter to see that those 220,000 proposed chargers are a low limit.
In the U.S., most of the charging happens in your own garage at home, and the public charging network is purely supplemental, to come to your rescue in case you venture away farther than the 35 miles you supposedly drive, on average. In China, for all intents and purposes, there is no charging at home. The single-family detached house with a garage is nearly non-existent in China. “Nobody had built single houses for individuals there since the 1930s,” said an American architect, who is intent on enriching China’s landscape with McMansions. The few single family dwellings in Bejing’s hutongs for instance were mostly razed, to make space for the high-rises where Tesla’s target demographic lives.
To avoid catastrophic market misconceptions, the proudly nano-managing, and usually advice-resistant Musk would have had to live in China himself to know how things work there. I did, for nearly 10 years. I lived in one of those high-rises. Our car was parked in a huge three-story underground parking complex (that also could double as a shelter in case of nuclear war.) The parking complex had “more S-class Mercedes and BMW Seven series than our whole town,” as a German client observed, but it did not have a single charger. I did not even have an assigned parking spot where to install a charger, we parked where we found space.
If you think it is complicated to convince your apartment building to allow a charger in the basement garage, you should move to China. “In China, where most people live in apartments, the bureaucracy of installing chargers in such buildings rises to a whole new level, creating a major obstacle that’s unlikely to go away anytime soon,” says an insightful article, which I recommend to anyone who needs a dose of market reality.
If you find the article too graphic, just this: When ALL our bathrooms were stopped up during the week-long October holidays in Beijing, because the pipe going 35 floors down was stopped-up, management promised help “in a week, when the workers come back.” When I desperately asked whether I could, please, very urgently, just borrow their snake, and I would take care of it myself, the answer was: “Sorry, regulations require that the snake is operated by three people.” I was lucky to live in the penthouse. A few floors down, and the shit produced by my upstairs neighbors would have flooded my apartment for a week, a not infrequent occurrence, as I heard. We packed our bags, clenched our teeth, occupied the bathroom at the airport for half an hour, and went to Tokyo for the week.
Occasionally, all lights, computers etc. went out in our luxury penthouse, usually at inopportune moments. Then, in the dark, we had to feel our way to the electric meter, we had to fish a little card out, go 35 floors down and two blocks away to the bank, and recharge the prepaid electricity card in a machine, Chinese characters only. A basement charger, are you kidding me?
It gets worse.
According to Tesla’s China spokesperson Peggy Yang, “Tesla continues to deliver to customers when their home charging validation is completed (i.e., after charging stations are installed at their permanent parking space at home or wherever they choose to, e.g. their office building) and when Tesla service centers are opened in their city.”
When the Daily Kanban was told this last May, we immediately made the forward-looking statrement that Tesla will not make its target of 5,000 Model S sold in China in 2014. There is no official number for China yet, until it arrives (which it probably never will, Tesla policy,) we should take Musk’s comments of yesterday as a “we failed.” It’s not a matter of customers that are misperceiving. It’s a matter of misperceiving reality. All it takes is a look at Tesla’s map.
I count 6 (six) Tesla service centers in all of China. Their required presence to enable a sale reduces the huge country to 5 cities (Shanghai has two centers, and well it should, Shanghai’s population is the same as that of Australia.) The requirement that “charging stations are installed at their permanent parking space at home or wherever they choose to” reduces the 5 Chinese cities to a few thousand potential customers, residing in a few McMansions in the villa districts. (They are popular with expat high-ranking executives of the many foreign carmakers in China. Guess what is in their garage.) End of story.
If you don’t believe me, read the story of Andrew Zong, a super-rich Model S fanatic from Guangzhou, China. The story is in InsideEVs, a site that cannot be accused of being anti-Tesla. Zong was one of the first Model S owners, but he had a problem:
“When I picked up my Tesla in Beijing, I realized that it’s impossible to drive it back to Guangzhou as there are hardly any places to recharge the batteries.”
“China’s lacking infrastructure created an issue for the owner of the long-range Tesla,” says InsideEVs. Dedicated Zong solved the problem by buying twenty Tesla chargers and giving them to people along the way. Even after donating his own private charging infrastructure, taking the car to Guangzhou in the south of China still needed some doing. Says InsideEVs:
“During the following twenty days, Andrew Zong and his companions have self-driven his Tesla for 5,750 kilometers via sixteen cities, in which they have donated twenty charging piles. To their astonishment, they finally succeeded in pioneering the first route of electric car charging network from north to south China.”
Google Maps will tell you that it’s roughly 2,150 km (1,336 miles) from Beijing to Guangzhou, and that it would take 24 hours by car, if you are crazy enough not to fly. The Model S extended that trip to 5,750 kilometers, and twenty days, spent waiting for a recharge at twenty strategically pre-positioned chargers in 16 cities. Climbing Mt. Everest is faster and easier.
The crowning of the story: Zong is in violation of Tesla’s rules.
Tesla’s map shows no service center in Guangzhou (but it promises that one would be “coming soon.”) Guangzhou is a city of 14 million people, three times that of Norway, where I count six Tesla service centers, by happenstance the same amount that serves all of China’s 1.35 billion. No service center, no sale: No wonder Zong had to pick up his car in Beijing. There probably are a few people in China just as fanatic about a Model S as Zong. They all should have their car by now in their rare own garage. Tiny market in a huge country, saturated already.
This illustrates only one aspect of Musk’s many misconceptions of the Chinese market, and the many misconceptions of those who believe the false prophet, instead of looking at a map. China is huge, promising, and full of pitfalls. More than a year ago, we listed a few more problems waiting for Tesla in China, and we still are only scratching the surface. We have a few more. Ask us on Twitter (@BertelSchmitt) if interested.
P.S. J.R. Warren, a research firm that has been following Tesla very closely in China, and which comes highly recommended, found as few more reasons. Their bottom line is the same: Tesla’s market is much smaller in China than expected. Like us, the company says: “The reasons Tesla is struggling in China aren’t all that hard to understand, and they’re unlikely to go away anytime soon.”