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Outlook for electric cars in China remains murky

China Daily – Tesla Motors Inc acts as if it knows something about the electric-vehicle market that seasoned observers don't.

The Silicon Valley company raised eyebrows at the Detroit auto show in January by announcing it would open its first Chinese dealership, in Beijing, this spring. George Blankenship, Tesla's vice-president of worldwide sales, described as "perfect" the timing of the move into the "incredibly important" market, but didn't elaborate.

Tesla, which already has dealerships in the United States, Japan, Australia and Europe, has since declined requests for details on its Beijing plan, disclosing in its fourth-quarter earnings release only that construction on the sales outlet is underway.

Given weak worldwide demand for electric vehicles, some analysts wonder how Tesla, or any electric-vehicle maker, can wring significant sales from China. Recent spells of thick smog in Beijing and other Chinese cities have refocused attention on low-emission vehicles as a way to rid China of a hazard to both human health and the country's economy. The State Council has called on the domestic auto industry to achieve production and sales targets of 500,000 pure-electric (battery-powered) and plug-in hybrid vehicles by 2015 and 10 times that number by the end of the next decade.

But nearly two years after global auto makers Nissan Motor Co and General Motors Co began selling their electric cars in China, sales have been weak, limited to government and corporate customers. "The government's been trying to promote them [electric vehicles], but it's not an easy sell," said Tim Dunne, director of Asia-Pacific market intelligence at consumer-research firm JD Power and Associates.

"While everyone [who does business with China] would like China to reduce their dependence on oil and reduce emissions," Dunne said, "EV sales are anemic in most markets around the world."

Data from the China Association of Automobile Manufacturers show that in the first three quarters of 2012, only 3,000 electric vehicles were sold in the country. Global consulting firm McKinsey & Co predicts the Chinese market will remain mostly unchanged, at least for the next five years, as individual buyers continue to be indifferent to electric vehicles.

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