General Motors (GM), Ford (F) Seeing Sustainable Growth in China; Telsa (TSLA) Sales 'Robust' - Goldman Sachs

September 24, 2014 8:28 AM EDT
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Goldman Sachs analyst Patrick Archambaul said General Motors (NYSE: GM) and Ford Motor (NYSE: F) are seeing sustainable growth in China. Tesla Motors (NASDAQ: TSLA) was also mentioned in the report, with Model S sales in China described as "robust."

"Model S demand in China is robust with wait times having expanded out to six months post the 3Q shutdown. Adding service centers is a key priority with delivery teams working around the clock to meet increasing delivery targets," said Archambaul.

"The reservation consists of an initial Rmb15k payment and after two weeks the customer is required to make a Rmb250k payment to secure a production birth. The rest is payable on delivery although the customer is notified of the payment once the vehicle ships, which can take 25 days. Right now Tesla does not get the subsidies for EVs that are offered to some of the locally built makers like BYD. The company is working with local officials and could conceivably be added to the list down the road in the second phase of implementation when the government's EV rules are further developed. Local sourcing is a relevant discussion point,” continued the analyst.

“With distribution likely to be the real pinch point shorter term, we think the strategy of leveraging local outsourced domestic service location makes sense for expanding distribution and service, as it’s very scalable and cuts down on upfront investments for things like body work and painting. From all indications demand appears very strong, and Tesla has ambitious targets. Industry officials we spoke to suggested that Tesla reservations had achieved 4,000 in China as of mid Sept,” he added.

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