Tesla is playing its part in China’s new energy vehicle market. Driven by the favorable national new energy subsidy policy, China’s new forces of new energy vehicle construction have also ushered in development opportunities. At present, Tesla, NIO, Xiaopeng and other auto manufacturers are targeting the price range of 300,000 yuan of the new energy vehicle market.
Offline shop popularity but slow purchase decision
“During the May Day period by the local government to stimulate consumption measures, our off-line shop flow has soared, the trend of recovery is obvious. “Weimar Automobile Chairman Shen Wei told First Financial Reporter.
Shen told the first financial reporter, from the sentiment to sales may be in the second half of the year, because the car purchase behavior decision-making cycle is relatively long. “Some people may have to look half a year before deciding which model to buy. We believe that new energy vehicles will certainly recover in the second half of the year. “New energy vehicle sales are sure to grow throughout the year. “
During May Day this year, Tesla announced a price reduction for the domestic Model 3, which will cost 271.55 million yuan, or about $385,000, to be awarded a new energy subsidy. The price provides Tesla with an advantage over the market for new energy vehicles.
Tesla’s shares closed up 8.5 percent on Friday after a sharp drop in Musk’s “share price is too high” and are now trading at more than $760.
“When China joined the WTO, the gap between China’s autonomous car brands and foreign brands was huge, both in terms of technology, products, marketing or supply chain. “But now that the gap is getting smaller and smaller, we have complete confidence in the technology of Chinese car companies compared to Tesla, ” Shen told First Financial. “
On April 23, the Ministry of Finance and the Ministry of Industry and Information Technology and other four ministries jointly issued a notice that the new energy vehicle subsidy policy will be extended until the end of 2022, in principle, the subsidy standards for 2020 to 2022 will be 10%, 20% and 30% from the previous year. Cars with a price of more than 300,000 yuan are not subsidized.
Although subsidies continue to recede, but in order to continue to ensure the price competitiveness of products, more and more car companies will choose to give profits to consumers, to fill the subsidy slope on its end price impact.
China’s new energy vehicle production fell 60 percent in the first quarter of this year to nearly 105,000 units, according to data released last month by the Ministry of Industry and Information Technology. Overall car sales fell 42 percent to 3.672 million units.
In order to enhance China’s share of the overall automotive market for new energy vehicles, the state is also actively promoting the construction of supporting infrastructure such as charging piles.
Wang Yanfang, a spokesman for state grid, said 78,000 new charging piles would be added this year, which is expected to boost consumption in the new energy market by more than 20 billion yuan.
Yang Jing, deputy director of Fitch Ratings, expects the decline in new energy vehicles to be less of a year, even though sales in China’s overall auto market will still fall by about 10 per cent this year.
300,000 yuan model sought after
At present, China’s new energy vehicle manufacturers have basically resumed production, new products are also being introduced. For example, The company plans to increase the number of stores in 110 chinese cities this year from 120 today to about 190. The company is also counting on potential government purchase orders.
Tesla’s most direct rival in China, NIO Auto, also said last month that sales rose 11.7 percent to 3,838 units in the first quarter of this year, including nearly 70 percent delivered in the month from mid-February to mid-March. NIO also announced on April 29th that it had reached a Rmb7bn investment agreement with strategic investors.
On April 27, Alibaba’s investment in Xiaopeng Also unveiled the new electric coupe P7, which has a range of more than 700 kilometers, and began delivery in June this year, selling for 230,000 yuan to 350,000 yuan.
Electric cars, priced at around 300,000 yuan, are becoming a competitive price range for car manufacturers. GAC NIO’s first electric car, the Hycan 007, released last month, is also available for pre-sale at 260,000 and is expected to start delivery in mid-May.
But these manufacturers still face a global “rival” to Tesla. “China’s new energy market looks very crowded, but it’s only Tesla that can really capture market share,” Bill Russo, founder of Automobility, an auto consultancy, told First Financial. The price of 300,000 yuan helped it attract more Chinese consumers, ultimately to gain market share. “
Cui Dongshu, secretary-general of the National Association of Travel Unions, believes that the 300,000 yuan subsidy threshold is set reasonable, which is conducive to new energy vehicles to enhance the price competitiveness of products, to achieve the traditional car price system.
“In the future, with the further increase of Tesla, will inevitably lead other luxury vehicles to further develop new energy vehicles in the Chinese market, forming a new energy war for luxury vehicles.” Cui Dongshu said.
Data from the industry show that the number of new cars registered in China increased by 12,709 in March, far more than any domestic competitor, with only 2,314 new registrations in China in February.
“Tesla has a stronger international brand ingress, it sets a high bar for the industry’s technical standards, and it depends on who can scale production earlier, ” says Zeng Weimin, a partner at Bain. “
Tesla has taken the lead over its competitors in the build-up to a large-scale production process. Tesla’s Shanghai plant is back in business better than expected, with model 3 expected to have a weekly capacity of 4,000 vehicles and 200,000 vehicles a year by the middle of this year, the company said in a earnings release last week.
According to the new policy of new energy subsidies, car companies need to sell more than 10,000 vehicles a year to get subsidies in time, but so far there are few brands that have crossed that threshold. In 2019, only NIO, Weima and Xiaopeng, the three auto manufacturers, will deliver more than 10,000 of the new forces in China’s new energy vehicles.