The first Tesla Inc. (NASDAQ: TSLA) Model 3 rolled off the production line last Friday and into the hands of CEO Elon Musk. With a base price of $35,000, before possible incentives, the Model 3 takes direct aim at the mass market.

While that’s good news for the company, Tesla — and other electric car makers — got some bad news from Hong Kong. The Wall Street Journal reported Monday morning that Tesla sales for the month of April in Hong Kong amounted to exactly zero. The government slashed a tax break for electric vehicles, effective April 1, and the price of a Tesla Model S effectively increased from around $75,000 to $130,000. In March, Tesla sold 2,939 new cars in Hong Kong.

The new tax policy is effective through the end of March 2018, although the government has said it will review the policy before that date.

While the fate of electric vehicles (EVs) appears to be tied to consumer incentives, the recent report from Bloomberg New Energy Finance (BNEF) projected massive long-term growth in EV sales regardless of government incentives:

Our Long Term EV Outlook is not a policy forecast. We assume that current policies remain in place until they are set to expire, but we do not assume any fresh policies are introduced. We also do not assume any specific national climate targets are met.

BNEF analysts have projected that vehicles with some degree of electrification will account for 54% of worldwide new car sales by 2040 and comprise a third of all light vehicles on the world’s roads. That projection is based on falling battery costs and stronger commitments from car makers to build electrified vehicles.

Battery costs have fallen by 73% since 2010, according to BNEF, and the price is expected to continue falling as battery technology improves and as more battery factories are built.

None of this will happen immediately, however:

While EV sales to 2025 will remain relatively low, we expect an inflection point in adoption between 2025 and 2030, as EVs become economical on an unsubsidized total cost of ownership basis across mass-market vehicle classes.

At $35,000 a copy, the Tesla Model 3 and the Chevrolet Bolt from General Motors Co. (NYSE: GM) are priced near the 2016 average new car price of $34,000. Lower operating costs are expected to more than offset the price of the cars, but without some near-term help in the form of government incentives it could be more difficult ratchet up enough demand for EVs to encourage investment in new technology and higher production.

Tesla’s stock price dropped about 11% last week and traded down another 0.6% in Monday’s premarket session at $311.37. The stock’s 52-week range is $178.19 to $386.99 and the 12-month price target is 283.89.

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