* U.S. electric car firm says China may be biggest market
* Seeks support from Chinese government to cut prices
* Charging stations key to prospects for green vehicle
By Maxim Duncan
BEIJING, April 22 U.S. electric carmaker Tesla
Motors Inc expects to invest "hundreds of millions of
dollars" building charging outlets in China, which could become
its biggest global market next year, billionaire co-founder Elon
Palo Alto, California-based Tesla plans to compete with
rivals such as BMW and Daimler AG's
Mercedes-Benz for a share of China's emerging green vehicle
market, which the government wants to develop fast.
Musk said Tesla hopes to cooperate with China's two major
power network operators - State Grid Corporation of China and
China Southern Power Grid - to build a sufficient
infrastructure for Tesla drivers, although charging stations
could also be built independently if needed.
"My instructions to the team are to spend money as fast as
they can spend it without wasting it," CEO Musk told reporters
on Tuesday at a ceremony in Beijing marking the first China
delivery of its Model S sedan.
"In dollar terms I think over time we'll probably end up
investing hundreds of millions of dollars in charging
infrastructure in China."
Beijing is providing purchase subsidies for electric car
buyers as part of its efforts to put 5 million alternative
energy-powered vehicles on the country's roads by 2020, but lack
of charging stations threatens to hamper that effort.
Musk said whether China could become Tesla's biggest market
next year would depend in large part on support from the Chinese
government to enable it to price its cars more competitively.
"I think there are some contingencies there, because right
now there are pretty significant import duties on the car and
our car is not eligible for (China's) electric vehicle
incentives, so that makes the car really almost twice as
expensive as it would otherwise be," he said.
Tesla has priced its Model S car in China at 734,000 yuan
($118,000), much lower than expected but still 50 percent more
expensive than in the United States.
"PUBERTY BEFORE DATING"
Musk said the company is not likely to make cars in China
within the next three to four years and is not in any serious
discussions to do so. "I think we sort of want to hit puberty
before we start dating," he said.
Local production would enable Tesla to avoid import duties
and become eligible for Chinese government's green vehicle
subsidies, but would also require Tesla to form a joint venture
with a Chinese partner.
Late last year, Tesla started taking orders in China for its
Model S sedans, and is starting to deliver them in Beijing and
Shanghai. But local media reported last week that 23 customers
outside the two cities were complaining they had not received
delivery notices, despite being among the first batch of buyers.
Musk said he had personally apologised to some disgruntled
buyers and explained to them that the delay was due to a lack of
service outlets or charging stations in their areas.
"If there is no service center within a long distance from
someone's house and we haven't resolved any charging question
marks then there's a high risk that they will not have a good
experience," he said.
Tesla, which opened a flagship store in Beijing late last
year, plans to open stores in 10 to 12 Chinese cities by the end
of 2014 as it expects China, the world's biggest auto market, to
contribute one third of its global sales growth this year, China
head Veronica Wu said in January.
Tougher competition is expected ahead. BMW aims to import
its i3 this year, Volkswagen plans to sell more than 15 green
vehicle models in China by 2018, and Daimler AG has
formed a venture with Chinese carmaker BYD Co Ltd
to make electric vehicles.
($1 = 6.2220 Chinese Yuan)
(Reporting by Maxim Duncan; Writing by Samuel Shen and Norihiko
Shirouzu; Editing by Mark Trevelyan)