Domestic Tesla delivery curtain opens to reshape China’s electric car business map

Tesla is on track for a “harvest year” after a “miracle” that will take 10 months to complete and put into operation at its Chinese plant. On December 30th Tesla’s Shanghai-bound super factory, Gigafactory 3, will deliver its first 15 Model 3 electric cars, the first “newborn” of Tesla’s china. Larger deliveries will begin in January.

The industry generally believes that in the domestic new energy car market subsidy cuts, sales decline, Tesla’s big move into the market, relying on localization to significantly reduce production costs, will form a “fish ingress effect”, may provide a local electric car companies “industry benchmark.”

However, some industry sources say Tesla is currently building only assembly plants in China, and the bigger challenge is to foster a local supply chain and localize core components as soon as possible.

Domestic Tesla delivery curtain opens to reshape China's electric car business map

First domestic Model 3 delivered

It is reported that the first 15 Model 3 electric cars will be welcomed, most lying with in-house Tesla employees.

In October, Tesla’s $2 billion superplant in Shanghai’s Lingang was announced earlier than expected, less than 10 months after it was laid to complete.

This would not only lower the price of the Model 3 in China, but would also allow Tesla to avoid the impact of Chinese tariffs on U.S. autos.

Tesla’s Shanghai super plant is expected to produce 1,000 vehicles a week by the end of the year, reaching its production target of 2,000 to 3,000 vehicles a week by the first half of next year, with annual production of about 150,000 vehicles. Tesla’s current global production target is to meet its global production target of 500,000 electric cars by June 30 next year.

But when asked about the current scale of production, Tesla did not disclose details to First Financial.

Tesla’s entry into the Chinese market comes at the toughest time for the car market, with 17 consecutive months of cliff-edge declines in Chinese car sales and unprecedented competition in the electric car industry. But Tesla has locked in nearly $1.3 billion in loans from Chinese banks to support the construction of its Shanghai-based plant, according to documents it handed them to U.S. regulators last week.

In addition, the Ministry of Industry and Information Technology in the newly released vehicle purchase tax exemption of new energy vehicle models (29 batch), the Tesla Model 3 models are included in the vehicle purchase tax exemption of the new energy vehicle catalog, which also means that all Tesla models have been included in the vehicle purchase tax exemption list.

Although 10 months to complete and put into operation can be called a “miracle”, but a senior automotive industry person told first financial reporters, Tesla’s port-facing plant belongs to the assembly plant, and did not fully complete the production of the four major processes (stamping process, welding process, coating process, assembly process), relatively difficult.

The bigger challenge for Tesla in the future, these industry insiders say, is to nurture a local supply chain. “Localization of the supply chain takes time and typically takes one to two years. If Tesla wants to reduce production costs, the core core will have to be domestic within two years, or it will lose money. He also said Tesla’s unique competitive advantage is reflected in several ways. “First, government support, which is an advantage that the new forces of domestic carmaking do not have; and Tesla already has factories in the U.S., early supply chain advantages, the future is a local problem; and finally, Tesla’s brand premium is undeniable.” “

Domestic Tesla delivery curtain opens to reshape China's electric car business map

“Tesla Halo”

With the domestic Model 3 to be delivered in bulk, with the help of its brand aura, Tesla is expected to absorb a large number of Chinese mid- to high-end consumers, while shaking up the mid- to high-end electric car market.

According to China’s new energy electric vehicle development plan, by 2025, new energy vehicles will account for one-fifth of total car sales, the year sales reached 7 million units. The plan is attractive to under-sold car makers, with local brands and global car companies actively laying out sales of New Energy Vehicles in China in order to capture the market and even profit.

Volkswagen, the world’s largest car maker, has set a target of 22m electric cars worldwide by 2028, more than half of which will be produced in China. Audi and BMW have also announced plans to make electric cars in China from 2020. And China’s home-grown “new forces of car-building”, Weilai, Weima and other manufacturers have begun to deliver electric vehicles, and will focus on China’s middle-class consumer population.

Tesla first entered China in 2014, when Tesla CEO Elon Musk hand over the keys to the first Tesla Chinese users in Beijing. In the first three quarters of this year, Tesla’s revenue in China was $2.14 billion, up 48 percent from a year earlier, according to financial data submitted to U.S. government agencies. In August alone, China imported more than 3,700 Tesla electric cars, a sharp increase of nearly four fold from a year earlier, according to unofficial data.

In Musk’s eyes, the Chinese plant is the “blueprint” for Tesla’s future growth, and tesla’s new plants around the world can learn from it. Musk has revealed that Tesla’s ultimate goal is to build 10 to 12 electric car manufacturing plants around the world. Such an ambitious localisation plan is designed to change the game by dramatically reducing Tesla’s production costs.

Tesla has announced berlin, Germany, as the site of its European plant, following the completion of its Shanghai-based plant. Tesla is expected to invest up to 4 billion euros, with construction starting in 2020 and expected to start production in 2021. When completed, the Berlin plant will meet its production target of 500,000 electric cars per year for the next two to three years and will create 10,000 jobs.

Tesla has said in a public report that the cost of producing the Model 3 at its Shanghai plant is 65 percent lower than in the U.S. production system. In addition, Tesla’s next new model Model Y will be available by the middle of next year, and the Model Y will be produced at its Shanghai plant.

The market expects a 20 percent or more cut next year when Tesla’s Shanghai plant goes into production. However, Tesla responded to First Financial by saying it “does not comment.”

The “fish ingring effect” increases competition

Still, Tesla will face challenges in China. “China is the world’s largest market for electric cars, but the competitive environment is still challenging for us, such as not being able to qualify for car purchases. Tesla has told First Financial.

The already saturated car market is a “survival of the fittest” market, who can seize the new demand of consumers, who have the opportunity not to be eliminated.

According to the National New Energy Vehicle Monitoring Platform, there were more than 480 electric car companies registered in China in March, including start-ups that have raised billions of dollars in capital over the past few years.

In March, the government cut subsidies for new energy vehicle companies in an effort to control the number of new energy vehicle companies and crack down on a number of electric-car companies set up in the name of fraud.

This has also affected the sales of new energy vehicles and the profitability of car companies. Sales of new energy vehicles, including electric and hybrid vehicles, jumped 44 percent to just 95,000, according to November auto sales data released by the China Automobile Association. BYD’s third-quarter results, released in October, showed net profit falling nearly 90 per cent. The Weilai car, once known as the “Chinese Tesla”, has also been hit hard.

Chen Shihua, deputy secretary-general of the China Automobile Association, said: “New energy vehicles in previous years at the end of the year will appear production and sales peak, this year, the intensity of subsidies narrowed significantly, sales have been five consecutive months of year-on-year decline, the whole year will show negative growth.” Judging from the economic benefits of new energy vehicle enterprises, they are in a loss-making state at present. It can be seen that the current new energy vehicle market is still driven by policy, policy changes on the market pressure is very great. “

An industry insider engaged in electric vehicle sales to the first financial reporter, the cause steaming of new energy vehiclesales has multiple reasons, including trade friction caused by export obstruction, the market lack of consumption capacity and consumer confidence, the switch of the five countries six standards also caused the car discount selling, early overdraft consumption.

Under great pressure, the market will face a cruel elimination. Tesla’s big move will also create a “fishing effect” that could provide an “industry benchmark” for local electric car companies.

As Tesla expands in size and production costs fall, the future will squeeze the survival of local competitors in the same price range, even chinese electric car giants such as BYD. NEXT YEAR BY DYER IS EXPECTED TO LAUNCH ITS NEW ELECTRIC CAR, BYD-HAN, FOR ABOUT 300,000 YUAN, ABOUT 16% CHEAPER THAN THE TESLA MODEL 3’S STARTING PRICE IN CHINA. But if Tesla cuts prices in the second half of next year, some consumers will no doubt follow the brand’s more powerful products.

Many manufacturers have begun to compete in dislocation with Tesla, some of whom have adopted aggressive low-cost strategies. Renault, for example, is betting on China’s new Renault eno electric car, which is priced at just 70,000 yuan after the subsidy. At the same time, Renault also spent 1 billion yuan to invest in Jiangling New Energy, to accelerate the capture of China’s electric car market.

The above-mentioned electric vehicle sales industry insiders said, “Tesla from the domestic offline to the scale of delivery will take a certain amount of time to climb, domestic listing will compete for the original stock market, whether to bring incremental customers to the new energy vehicle market can not be expected at present.” “

He also said that the price range of 250,000 to 350,000 yuan of electric vehicles “killing” will be very “severe.” But some manufacturers have opted for a “positive battle” with Tesla. For example, the ES6, a smaller SUV electric car, is priced at the same price as the Model 3. On December 28th, Weilai Automobile also announced the launch of its new ES8 SUV electric car at the Nio Day in Shenzhen. In the context of the decline of new energy vehicles, such high-priced domestic electric vehicles are facing no small challenges.

The industry remains optimistic about the future growth prospects of new energy vehicles. “Although in the short term, the reduction in subsidies has affected the sales of new energy vehicles, but in the long run, new energy vehicles are an irreversible trend. This trend will also upend the dealer model of traditional cars. The industry said. “New energy vehicles are growing by less than 30% this year, but this is a good performance in all industries, ” Shen Wei, founder, chairman and CEO of Wayma Automobile, also told First Financial. “

Add a Comment

Your email address will not be published. Required fields are marked *