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Low oil prices a curse for electric car producers

Tesla co-founder Elon Musk has admitted that plunging oil prices have made it that much harder to get consumers interested in electric cars. But he thinks he knows how to ride out the challenge of cheap fossil fuel.

Addressing a business conference in Hong Kong on Tuesday, Tesla's Elon Musk said record-low oil prices were making the transition to sustainable energy more difficult.

"No doubt [the current oil prices] are going to dampen interest in electric vehicles in general," Musk said at the "StartmeupHK" event.

The luxury all-electric US carmaker was founded back in 2003 and rose to prominence as oil prices soared and made alternative energy vehicles more tempting. But with those times gone, the fledgling industry finds itself under a lot of pressure.

Musk argued manufacturers would have to design futuristic cars to entice buyers in order to ride out the challenge of low crude prices.

Watch video 01:16

Tesla unveils first fully-electric SUV

Reining in unit costs

He said Tesla was taking orders for its new Model X, boasting some self-driving capabilities and falcon-wing doors.

"What we're aspiring to do is to make the cars so compelling that even with lower gas prices, it's still the car you want to buy."

Musk added that new Tesla cars would have more affordable price tags, also because of the company's own battery plant under construction in Nevada, which is seen as crucial to cutting vehicle prices.

He told CNN that Tesla wanted to start producing cars in China as soon as possible, but warned it might take another three years for this to happen. The company is keen to have production facilities in the Asian nation as locally-made cars would be granted state support, bringing down unit costs.

Right now, a Model-S car costs $76,000 (70,000 euros) in the US, while buyers in China have to shell out $106,000 for the same car.

hg/cjc (dpa, AFP)

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