tesla-motors-stockElectric carmaker Tesla Motors (NASDAQ: TSLA) has big plans for China. And those plans have the potential to send the high-flying Tesla Motors stock even higher.

After resolving a legal dispute with a Chinese businessman who registered “Tesla Motors” back in 2006, the stage has been set for Tesla’s new frontier.

China is increasingly an important market for makers of luxury goods. The country boasts a population of 1.4 billion people, and has a rapidly growing population of wealthy people.

China is already one of the world’s best markets for luxury cars. By 2015, it could become the #1 market.

For most luxury car buyers in China, “luxury” seems to be synonymous with “European.” Audi, BMW and Mercedes-Benz currently make up more than 70% of the Chinese market for high-end cars.

And these brands are scared.

Yes, the Chinese market for high-end cars is larger than $40 billion annually. But competitors from all over the world are desperately trying to capture the Chinese market.

General Motors (NYSE: GM) announced big plans to expand its Cadillac unit. The company hopes to build a dedicated facility in China to keep production costs and shipping costs down.

The Chinese luxury car market is certainly competitive, but the market is ripe for disruption. And Tesla has proven to be very effective at disrupting the markets it enters.

Tesla opened its Chinese flagship store in Beijing at the end of 2013. In 2014, the company plans to open at least 10 more stores.

Thus far, Tesla is rolling out a similar strategy that was successfully executed in the U.S. and Europe.  That includes manufacturer-owned dealers and a network of Supercharge stations that allow drivers to charge up for free.

Tesla also wants to open a production facility in China, increasing the company’s ability to win customers in the region. The company’s plans are rapidly advancing, with founder Elon Musk expected to visit China in March to review production facility options.

One reason that luxury carmakers are coming to China is because there is considerable demand for high priced cars.

Most luxury car brands sell vehicles in China for twice or even three times as much as they would sell for in the U.S., a strategy that reeks of price-gouging. But with the explosive success of the luxury car market in China, it seems high-end Chinese customers are willing to pay it.

In China, Tesla sells its Model S for 734,000 yuan, approximately $124,780. This is essentially the U.S. price of $81,070, plus the cost of shipping and Chinese taxes.

That means that Tesla’s Model S is a far more affordable option compared with cars from Audi or BMW.  The potential downside to Tesla pricing well below its peers is that some experts worry Tesla’s lower price will make Chinese consumers feel it is inferior to other cars in the category.

But in a market where other $80,000 cars sell for the yuan equivalent of $160,000 or more, Tesla’s pricing strategy could prove wildly successful. Chinese consumers will likely appreciate Tesla’s straightforward pricing — not to mention the cool, environmentally friendly cars.

China offers the next big opportunity for Tesla’s expansion.  With the company’s expansion already underway, this could be the next opportunity that continues to fuel Tesla Motors’ stock growth. Shares are already up more than 850% since its IPO in 2010.

My colleague – Ian Wyatt – recommended Tesla shares to his $100k Portfolio subscribers just 11 months ago when shares were trading at $38.  And readers who have followed his advice are sitting on gains of 356%.

Even after those gains, Ian’s telling his subscribers “it’s best we hold onto at least a portion of our Tesla position to see just how far this run can carry us.”

Perhaps expansion in China is just what Tesla Motors stock needs to keep rising in 2014.

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Published by Wyatt Investment Research at