Tesla Grows European Network Ahead of Model S Launch

PARIS – With the Model S prepared for launch in Europe this summer, Tesla Motors is expanding its network in the region.

The California electric-vehicle maker will add dealers and repair facilities, as well as a recharging service in Norway.

Speaking at the Automotive News Europe Congress here, Paula den Dunnen, communications manager for Europe, says Tesla will add dealers in London, Brussels and Amsterdam, expanding its network to a dozen cities. The auto maker also will add new service centers in Amsterdam, Brussels, Frankfurt, Vienna and Hamburg.

Norway is Europe’s leading EV market in terms of proportion; the vehicles’ 3% share in May was by far the region’s largest. Some 12,074 battery-electric vehicles and 503 plug-in hybrids are registered in the country, and 2,700 new EVs were registered there in the first five months of 2013.

Den Dunnen says Tesla does not disclose sales results in individual countries, but Norway is the auto maker’s biggest European market, followed by the Netherlands. Of 2,500 Roadster models delivered worldwide in 2012, some one-third, or about 850, were sold through Tesla’s nine existing European stores, she says.

Roadster production ended in early 2012, but the Tesla outlets since then have been servicing the vehicles and preparing for the Model S launch. Den Dunnen declines to say how many European buyers have placed Model S reservations.

Norway’s tax system encourages EV competition with ordinary cars. The all-electric Nissan Leaf, for example, costs $42,500 in Norway, about the same as a 1.3L Volkswagen Golf at $42,000. In the U.K., reports Reuters, the Leaf costs $35,500 and the Golf $24,600.

“If sales remain at this level, in the course of the year auto makers will have sold almost 6,000 rechargeable cars in Norway, which shatters our projections,” Ole Henrik Hannisdahl, project manager at Green Car, says on the Norwegian organization’s Gronnbil website.

Plug-in hybrid sales have not been as dynamic as battery-electric vehicles, he says, but potential customers may be waiting for a change in the tax system coming July 1. Taxes will be cut not only for PHEVs but also for the Opel Ampera and Chevrolet Volt extended-range electric vehicles, which Norway classifies as PHEVs.

“Electric vans are still a rarity on the road, although both Peugeot and Renault offer them,” Hannisdahl says. “We believe these will become more and more common in traffic throughout the year, especially in cities where electric vans can save time” by using special traffic lanes.

Tesla’s expansion in Europe will be followed by its entry into Asian markets in the fall. CEO Elon Musk forecasts 21,000 worldwide Model S sales this year.

The auto maker delivered 4,900 units in the U.S. and Canada in the first quarter, when it reported an $11 million profit that sent share prices rocketing. Tesla paid back its loan from the U.S. Department of Energy, giving it “additional operating flexibility and agility,” Musk says.

Tesla is preparing a Model X SUV for 2014 on the platform used by the Model S, and Musk promises a more affordable third-generation car, at about half the price of the $70,000 Model S, in late 2016.

“That's really the car I wanted to create from the beginning,” Musk told Bloomberg News. “A compelling, affordable car that has a range of at least 200 miles (322 km).”

Besides selling cars, Tesla sells its battery technology to Toyota for an electric RAV4 and to Daimler for its electric Mercedes-Benz B-class.

The failure of Fisker, Coda and other startup EV companies, and slow sales of electric cars from major auto makers such as Nissan, Renault and Ford, stand in contrast to Tesla’s profitable first quarter.

"The Model S success, coupled with Tesla’s cash position, allows investors to look ahead to the X and (third-generation) vehicles,” writes Baird Equity Research analyst Ben Kallo. He has raised his price target on Tesla stock to $118 a share, but there are many short sales – 24% of the Tesla shares that were tradable at the end of May – from people who believe the price will fall.