Tesla Motors Inc (TSLA - Get Report) is apparently considering expanding into Korea, but there’s one thing that could be holding it back— production constraints. The automaker emphasized at its recent earnings call that production constraints rather than demand constraints were the one thing holding it back, and it sounds like this problem could keep the automaker from expanding into new markets like Korea.
Tesla’s global expansion could slow
Today Investor Relations Vice President Jeff Evanson told The Korea Herald that Korea is an "exciting" market, although he stopped short of saying whether they would open a store there soon. He also wouldn’t say if they consider Korea to be lower on its priority list of markets, emphasizing instead that they are already seeing supply constraints in the markets they currently serve.
Evanson and other executives at Tesla Motors Inc (TSLA - Get Report) were in Korea holding the company’s first investor relations meeting in the country. KB Securities analyst Shin Jung-gwan told the newspaper that it looked like the automaker was more interested in securing investments in Korea rather than selling cars there.
Will Korea invest in Tesla?Evanson said they met with the National Pension Service in Korea to talk with representatives about making an investment into Tesla. The analyst was skeptical that the government agency would be interested in Tesla Motors Inc (TSLA - Get Report) because of the automaker’s recent poor stock performance and its continuing business losses. The executive also said they did not meet with officials from the Environment Ministry. Such a meeting would suggest that they were considering launching their vehicles in Korea.
Tesla moves into other parts of AsiaTesla Motors Inc (TSLA - Get Report) has been making progress in other parts of Asia. The automaker plans to deliver 21,500 Model S sedans next year, with some of them going to China. They will be opening a new store in Shanghai by the end of the year. Evanson said Asia was an important market for them and that they would keep working on agreements with the suppliers of its battery cells. The automaker currently has locations in Hong Kong and Japan. Japan is home to its Asian headquarters.
Tesla deals with battery supply constraintsRecently Tesla signed an updated supplier agreement with Panasonic Corporation OTCMKTS:PCRFY TYO:6752 to increase the number of battery cells the company produces. Panasonic will bump up its production to almost 2 billion battery cells over the next four years. Evanson confirmed that in spite of that expanded agreement, they are still taking with other suppliers, including LG Chem and Samsung SDI. He also said it takes "several years" to get cell suppliers qualified to work with them.
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