Nuggets Tesla’s domestic chain who benefits the most?

Tesla may be more likely to be a destination for its product sales until 2018, but starting in 2018, Tesla is building its first overseas superplant in Shanghai, China, which is already mass-producing the Tesla Model. 3, which makes investors have a lot of expectations about the localization of Tesla’s supply chain.

“Daily Economic News” reporter combed the Tesla supply chain, found that some companies in the face of the supply chain of the trend of localization, some companies are not clear, and some companies because of the amount of information available to the public, it is difficult to judge the extent of their benefits, and some companies because of the already large body size, Tesla’s domesticization of the incremental contribution to performance is limited. This in-depth report is intended to clarify who benefits most from the complex supply chain.

The Redeemer of the U.S. Auto Industry

Although the U.S. has seen an increase in car ownership per capita over the past 50 years, the U.S. auto industry is shrinking. There is a huge gap in passenger car sales in the U.S., and the gap between sales and production is that imported cars meet demand in the U.S.

In his book The Innovator’s Dilemma, Clayton Christensen refers to the durable goods alternative model, in which when the penetration of the durable goods market approaches 100%, the industry will start to look down on alternatives, leaving companies on existing tracks in a bad position.

Tesla was born against this background, emerging as the redeemer of the U.S. auto industry, and quickly became a shining star in the U.S. auto industry.

The Tesla Model 3 was officially delivered to customers in 2017, quickly becoming the number one car in the U.S. luxury car market.

Tesla’s appearance as a disruptor in the traditional auto industry also raises questions about whether Apple, led by Mr. Jobs, to disrupt the phone industry a decade ago, could be a big hope for Tesla investors to disrupt the traditional auto industry, as did Apple’s mobile phone industry.

In July 2018, Tesla signed an agreement with the Shanghai municipal government to announce the location of Tesla’s China plant, Tesla’s first superfactory outside the United States. Tesla’s Super plant in Shanghai is already producing the Model 3.

Tesla plans to produce 500,000 vehicles a year when it is fully operational. This shows that the Shanghai Super factory for Tesla has a pivotal position.

At present, the domestic Model 3 standard battery upgrade price is 3558 million yuan, this price compared to the luxury car brand has a competitive advantage. It is to be seen whether model3 will be able to continue its success in the United States in China.

Nuggets Tesla's domestic chain who benefits the most?

Suppliers of battery and electric drive systems

It’s hard to find a Chinese company in the previous Tesla Model S. As a result, the market has expectations that Tesla’s superfactory will be located in Shanghai, or that it will be driving the localization of Tesla’s supply chain.

According to a tesla research report on Tesla, the value of the tesla Model 3 is 38% for the power battery assembly system, 24% for automotive electronics, 12% for body and interior, 11% for electric drive systems, 11% for chassis and 4% for high-voltage systems. With the growing maturity of domestic suppliers, domestic suppliers have joined Tesla’s supply chain system.

According to Guojin Securities estimates, the power battery assembly accounts for nearly 40% of the value of the Tesla Model 3, of which the power battery accounts for about 30% of the value.

Tesla’s power batteries have been supplied by Japan’s Panasonic. However, public information suggests that Panasonic has no intention of investing in a battery-supply plant around The Tesla Super plant in Shanghai, possibly because of losses in Its Tesla business.

On December 6, 2019, the Ministry of Industry and Information Technology released the latest “New Energy Vehicle Promotion and Application Recommended Model Catalog” (11th batch of 2019), in which Tesla’s model is TSL7000BEVAR0 pure electric car battery system energy density is divided into two types. It has also fuelled speculation that the battery supplier is likely to be a two-company supplier. The new supplier of Tesla’s powered batteries is South Korea’s LG Chemical, First Financial reported.

It’s worth noting that there were previous market rumors that China’s domestic lithium-ion battery giant Ningde or tesla’s suppliers, but then the Ninder era clarified the matter. As far as the current public information is available, the Ninder era has not reached a substantial battery supply agreement with Tesla.

The Nande-era partnership with Tesla is still in the market, and Asahi’s stake has entered Tesla’s supply chain, which has supplied products to model S and Model X. From 2016 to the end of June 2019, Asahi’s shares accounted for 56.61 percent, 56.46 percent, 61.51 percent and 52.09 percent of Tesla’s sales revenue, respectively.

In its research report, Century Securities estimates that assuming Tesla sells 500,000 and 650,000 vehicles in 2020 and 2021, respectively, model X and Model S will sell 100,000 and 120,000 vehicles, respectively, and Model 3 and Model Y will sell 400,000 and 530,000 vehicles, respectively. If the price and proportion of accessories remain unchanged, Asahi shares are expected to generate revenue of 864 million yuan and 1.066 billion yuan, respectively.

Automotive chassis suppliers

Several brokerages also have high hopes for Top’s car chassis products to enter Tesla’s supply chain.

According to Oriental Securities estimates, Tesla’s profit elasticity was 9.4% and 7.5% for new domestic production in 2020 and 2021, respectively, and 14.1% and 11.2% for top-of-the-line production, or 14.1% and 11.2% for new production of 150,000 vehicles. Guojin Securities has estimated that The Topp Group’s incremental earnings per share for Tesla in 2020 will be 0.14 yuan.

On August 23, 2016, the Top Group received a Supplier Fixed Terms (Agreement) issued by Tesla ( hereinafter referred to as the Fixed Point Agreement). The fixed-point agreement describes the Approval of the Top Group to supply lightweight aluminum chassis structures to Tesla for use on Tesla Model 3 models. At the same time, The Top Group in its announcement also prompted the “fixed-point agreement non-orders, no clear definition of sales revenue” such a sentence.

Beyond that, Top group has not disclosed any details of its partnership with Tesla. On Panorama’s investor relations interactive platform, Top explained that the reason for its silence on the details of its partnership with Tesla was that “the company respects and strictly adheres to the confidentiality requirements of its customers.”

“Suppliers entering Tesla’s supply chain will sign nondisclosure agreements with Tesla and will not disclose to others what they are working with,” an industry insider told reporters. “

The Daily Economic News noted that Top’s quarterly revenue matched Tesla’s Model 3 production. In particular, from the fourth quarter of 2018 to the second quarter of 2019, Model 3’s production grew steadily, with Top Group’s single-quarter operating income on a downward trend.

In its 2019 half-year report, Top Group explained that the 20% decline in operating income for the current period was due to a decline in auto sales due to the industry situation.

TopGroup’s operating income is highly correlated with China’s quarterly passenger car production, with Top Group’s single-quarter operating income and China’s quarterly passenger car production both in the decline cycle starting in 2018. This also confirms the statistical evidence of the Topp Group’s explanation of the decline in operating income, “due to the decline in car sales due to the industry situation.” “

In addition, the distance between the Shanghai Tesla Super plant and the geographical distance of Ningbo where top-up group is located, it remains to be seen whether Tesla’s mass production will generate strong revenue growth for the topological group.

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