Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

On January 7th Tesla will welcome its first mass delivery to a mass consumer at its Shanghai plant. But before that, on January 3rd, Tesla officially announced a price adjustment for the domestic model 3, with the standard battery upgrade of the model’s official guide price. 3 from the original price of 3558 million to the current price of 3238 thousand, suddenly dropped more than 30,000, and then added to this model enjoy s24.75 million subsidies, the lowest price to the hand up to 299.05 million.

It is worth noting that the domestic Model 3 does not send home to fill piles. According to the latest sales policy, the Home Charging Service Pack is priced at 8000 yuan and includes a charging pile and 80 meters cable for the basic installation fee, which the user can purchase at the vehicle’s discretion before or after sale.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

In addition to the official price change, the model 3’s optional configuration price has been reduced accordingly. Among them, pure black car paint is free, the rest of the pearl white, cold silver, deep-sea blue, Chinese red 4 colors of car paint price reduced to 8000 yuan. At the same time, the 19-inch sports wheels were reduced to 6000 yuan.

Overall, after the Model 3 price reduction, combined with this model enjoys new energy preferential subsidies and purchase tax relief policy, users to buy the standard battery upgrade version of the domestic Tesla Model 3 will be less than 300,000, compared to other domestic new energy vehicles, the cost-effective increase a lot. It is also expected to boost sales of the domestic Tesla Model 3, which is also a big boon for domestic Tesla Model 3 industrial chain companies.

First, domestic Tesla production capacity and future market pattern

1, capacity

As we can see by tracking Tesla’s total sales, the company’s quarterly production appears to have reached a bottleneck after 2018Q3, stabilizing at around 90,000 units in a single quarter and slowing sales growth.

According to Tesla’s pre-planned pre-plan, Tesla’s U.S. vehicle plant, the Giga Factory1, has a power battery capacity of 20 Gwh in 2018, with a capacity utilization rate of 73% for 215,000 vehicles. Push giga 1’s capacity plan is around 300,000 units, and we expect the company to target sales of around 350,000 vehicles in 2019, with capacity utilization of more than 110 percent and undercapacity.

The overlay currently has to wait about a quarter for a tesla’s official website to book a car, eliminating production and shipping times, and the queue number should be after 50,000. So we’re judging that Tesla is still in clear oversupply, and that the construction of the Giga Factory 3 in Shanghai has both the dual purpose of expanding the Chinese market and increasing the company’s capacity. So even if the country cannot fully absorb its capacity in the future, it can be exported to other neighbouring countries.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

With an investment of $2 billion, an annual production capacity of 250,000 vehicles per year for the first phase, Giga 3 is designed to have a maximum capacity of 500,000 vehicles per year for the production of Model 3 and Model Y models, with an estimated production of 150,000 vehicles per year in 2020. In terms of current construction progress, we believe giga 3 is moving faster than market expectations.

Tesla’s current weekly production has reached 1,000 units, according to a December news agency. If this efficiency capacity continues to climb, the target of 150,000 units per year should not be difficult to achieve. However, given that Model 3 production is still in CKD mode (Completely Knocked Down, where the car enters in a state of complete disintegration and then assembles all the car’s zeros and components into a complete vehicle), the supply capacity of domestic component manufacturers and the integrated production capacity of the plant have not been completely tested.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

In addition, as the most important components of new energy vehicles, the core is still provided by Giga 1 Panasonic, the future of the main domestic supplier LG will be able to successfully connect the rod remains to be seen, after all, before the strong Panasonic also because of lithium battery capacity did not reach the planned level, resulting in the Tesla Model 3 capacity constraints. However, there is no need to worry too much about the production capacity of giga 3. Because

Tesla has been heavily supported by the Shanghai government for land, plant, capital or policy during the plant construction period, largely blocking the impact of external factors on production, while internally, thanks to the experience of Giga 1 and China’s top skilled workers, capacity climbs will theoretically be faster than those in the United States.

2, domestic and foreign market pattern

Tesla is in the leading position in the U.S. new energy vehicle passenger car market. Tesla’s sales in the U.S. have risen rapidly since 2012, from 2,509 in 2012 to 190,000 in 2018, and 136,000 units in the first three quarters of 2019, up 19 percent from a year earlier.

Tesla’s market share in the U.S. has also growt, from just about 5 percent in 2012 to 57 percent in the first three quarters of 2019. Tesla’s products are highly competitive and market-expanding in terms of their development in the U.S. market.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

Tesla’s overall market share in the U.S. new energy passenger car market for the January-September 2019 period has reached 57.5 percent, 50 percent higher than that of the second-ranked Chevrolet. The Model 3 is also a major seller for Tesla, with the Model 3 taking 47.3 percent of the market.

In terms of sales of single-model vehicles, Tesla’s Model 3/S/X ranked 1, 3 and 5 in the top 10 of the u.S. new energy passenger car sales in the first three quarters of 2019. The Model3 topped the list with 110,000 vehicles, well ahead of the second-ranked Toyota Prius.

In terms of market share and model sales, model3 models are competitive in the U.S. market, and model3 will have a direct impact on the domestic new energy vehicle market, which will directly occupy some of the market share of other new energy vehicle companies.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

From the current domestic new energy passenger car overall competitive landscape, with the intensification of market competition, market share continues to focus on the head advantage enterprises. In the first ten years of 2019, the market share of the top 10 new energy passenger vehicle scars was 73.5%, up 1.7 percentage points from 2018.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

At present, the domestic new energy passenger car market is still mainly independent brands, while joint-venture brands occupy a small part of the market share. Independent brands SUCH as BYD, BAIC New Energy, Geely Automobile, SAIC Passenger Cars, GAC passenger cars and other market share in the forefront, joint-venture brands SAIC Volkswagen, Brilliance Automobile, FAW Toyota, GAC Toyota and other market share gradually increased, but the overall share is still small.

With the domestic Tesla market, the domestic new energy passenger car market competition pattern will take place important changes in the future.

Domestic Model3 standard battery-renewed upgrade version of the previous price of 3558 million yuan, compared with the domestic independent brand in the high-end new energy vehicle BYD Tang EV, the price of the two is close. In terms of performance, compared with Tang EV, the Model3 is relatively close in range, there is no obvious disadvantage, but at the same time, the wheelbase, maximum speed, 100 km acceleration, fast charging time and vehicle warranty have certain advantages.

ABB, Tesla’s immediate rival, is still ill-prepared for new energy vehicles in the country.

Audi’s domestic sales of new energy vehicles are mainly imported Audi e-tron, its price of 70-83 million, the price is much higher than the domestic Model3, and its top speed, 100 km acceleration, vehicle warranty and other aspects behind the Model3.

BMW is currently in production and sales in China’s new energy models include the BMW X1 and BMW 5 Series new energy two plug-in hybrid models, for the time being, there is no pure electric vehicle model to provide. In terms of price, the price of the BMW X1 and BMW 5 Series new energy is higher than the Model3, and in terms of performance, the Model3 reflects the advantages of pure electric vehicles in terms of maximum power, maximum speed, 100 km acceleration, etc.

In addition, Mercedes-Benz has not put into production of new energy vehicles in China. Comprehensive and domestic independent brands in the high-end new energy vehicles and ABB’s new energy vehicles, the domestic Model3 has a strong competitive advantage.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

What’s more, before the first batch delivery of the domestic Tesla Model 3 to the mass consumer, the price was further reduced to 3238 million yuan, including the new energy preferential subsidy and purchase tax relief policy, the lowest price is only 299.05 million, making its market competitiveness further enhanced.

In addition, from the previous outflow of the Sino-US production Model 3 comparison, the assembly process of domestic models slightly better than the imported models. This has also led many institutions to believe that domestic Tesla can be fully sold, and even export of an important source of confidence.

The Model 3 Standard End Drive Upgrade versus the Model 3 Standard Range Plus Rear Wheel parameters are shown in the table below:

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

Second, domestic Tesla industry chain related companies

1, Tesla supply chain

Tesla is a cyclical consumer goods, finance, industrial, and utility integrated enterprises. In cyclical consumer goods, Tesla’s main business is automotive manufacturing, including new energy vehicles such as the RoadSter and the latest Model3. In addition, Tesla is involved in powertrains and supercharger products. In finance, Tesla’s business is financial services, including financial and financial leasing schemes when it borrows to buy cars. Industrially, Tesla’s products are dominated by supercapacitors and solar roofs, as well as pure-electric truck projects, such as the recently new electric pickup truck. On utilities, Tesla’s business is a massive power generation project for alternative energy sources.

Tesla’s rich, vast product line is made up of Tesla and more than 450 of its subsidiaries (see chart below). In addition to parent company Tesla Inc, two subsidiaries, Tesla Energy Operations Inc and Maxwell Technologies Inc, are also critical.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

As of the end of September 2019, there were 89 Tier 1 Tesla vendors and 1195 Tier 2 vendors recorded in the FactSet database.

U.S. companies make up a large proportion of these 89 tier-one suppliers. In January 2015, Tesla had 17 U.S. suppliers, or 36.17 percent, 9 european suppliers, or 19.15 percent, and China had only 7 suppliers, accounting for only 14.89 percent. In recent years, the share of U.S. companies among Tesla suppliers has remained virtually 30%-40%, while the share of Chinese companies has continued to increase.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

As of September 2019, There were 20 Chinese companies out of Tesla’s 89 suppliers, second only to 28 in the United States. In addition, there are 14 European companies, 11 Japanese and Korean companies and 16 other regional companies. In terms of percentage, us companies were 31.46 per cent, Chinese companies 22.47 per cent, European companies 15.73 per cent, Japan and South Korea 12.36 per cent and other regional companies 17.98 per cent.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

2, domestic Tesla Model 3 supply chain

Although the number of components on the Tesla Model 3 has dropped from 30,000 to 10,000, it still has a complex and long supply chain system involving a wide range of industries, including automotive, electronics, electrical, chemical, and numerous suppliers at home and abroad. With Tesla’s rapid development, particularly the completion of the Giga 3 plant in Shanghai and the mass production of domestic Tesla cars, it also provides growth opportunities for domestic listed companies entering its supply chain.

In 2018, the German magazine Wirtschafts Woche interviewed an engineering firm that bought the Model 3 in the second-hand market and dismantled it. They believe the car’s material and logistics costs are about $18,000 and labor costs are about $10,000, so the total cost is about $28,000. So for the time being, $18,000 is the total cost of parts for the Tesla Model 3.

Tri-Electric systems are the most expensive of model 3’s overall value, with battery systems accounting for the largest share, with the latest power cost of about $111/kWh (UBS data) for Tesla’s latest battery pack slot sits at $6660, or 37% of the total component cost.

In terms of battery systems, Tesla currently uses power batteries supplied primarily by Panasonic and LG. Domestic listed companies, Xusheng shares to supply battery pack shell, box, cooling system components and other products, Huayuan automotive supply battery box and other products.

In terms of electric drive system, the motor controller is supplied by Tesla, the domestic market shares in The Sun to supply transmission box, transmission suspension, motor end cover, motor housing and other products;

Heat management system, foreign suppliers mainly include Dena, Gaohua company. Among domestic companies, Sanhua Zhicontrolled supplies Tesla with hot management products such as expansion valves and water-cooled plates.

In the automotive electronics section, foreign suppliers include Tesla (autopilot system), Mobileye (camera), Co-op Electronics (car lens), Delphi, Valeo (mmwave radar), Bosch (supply ABS system) and so on. Among domestic listed companies, both are the main suppliers of human-computer interaction products HMI, four-dimensional map new to Tesla’s exclusive navigation map supplier, Changxin Technology supply of medium-control screen module products.

In the body systems section, foreign suppliers include Lotus, etc. Among domestic listed companies, Huayuan automobile supply body assembly parts, side circumference, back cover mold and other products;

In the field of internal and external decoration system, foreign suppliers mainly include Magna, Hella, Mortimati, Asahi Nitro, Hanna WeiShitong and so on. Among domestic listed companies, Huayuan car supply seat chair, bumper and other products, Minmei shares supply sun visor and other products, are son and electronic supply driver airbags, steering wheel and other automotive safety system products, Ningbo Huaxiang supply trim and other products.

In the undercarriage, foreign suppliers mainly include Bosch, Continental Group, Michelin, ThyssenKrupp and so on. Among the domestic listed companies, Top Group supplies Tesla with lightweight aluminum alloy chassis structures, large body structures and other products;

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

It should be noted that, with the exception of the trielectric system, the most valuable part of the Model 3 is concentrated in the chassis and interior. Tesla, a rising star of luxury cars, has fewer collaborations with traditional mainstream Tier 1 auto parts suppliers in chassis and interior, giving domestic parts companies plenty of opportunities.

This plant in Shanghai Lingang, further enhance the supply advantages of domestic enterprises, good for the East China auto parts manufacturers. With the exception of Shanghai, Hangzhou is only 176 km by the direct line, Changzhou is 204 km away, and Ningbo passes through Hangzhou at a distance of 316 km (the distance will be reduced to less than 300 km if the distance is reduced to 300 km if the distance is passed through the Shanghai-Yuan Bridge). are within the 4-hour availability. We believe that whether it is labor costs, production efficiency or supply distance, China’s domestic parts companies have advantages over foreign companies, there will be a greater opportunity to further increase the proportion of Tesla supply.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

Companies that are known to benefit significantly both in location and product include The Top Group, which provides interior and chassis structures for domestic Tesla in Ningbo, Huayuan, which provides seat assembly and exterior for Tesla in Shanghai, and Yusheng Electronics, which provides sensors and HMI systems in Ningbo, and Shaoxing, Sanhua Zhicontrolled, which provides components for thermal management systems, and Asahi, located in Ningbo, provides a seupe stake in lightweight parts of cast aluminum.

Third, domestic Tesla part of the supporting company earnings elasticity measurement

With the official launch of the domestic Tesla Model 3, the company as its supplier will benefit.

Based on Tesla’s current production capacity plan, the Shanghai plant is expected to have a capacity of 150,000 vehicles per year and 300,000 units per year in 2019 and 2020, respectively. In this article, we measure the net profit elasticity of listed companies benefiting from the Tesla industrial chain only in increments brought by Tesla’s Shanghai plant, wherein the net profit elasticity in 2020 is based on the 2019 net profit forecast value and the net profit elasticity in 2021 is based on the 2020 net profit forecast.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

From the bicycle value analysis, Huayuan car to Tesla’s main supporting: including seat assembly, battery box and body parts, side circumference, back cover mold, bumper, etc., the estimated value of the bicycle in more than 10,000 yuan; Second, it is expected to be the Top Group, which mainly supplies lightweight aluminum alloy chassis structures, large body structures, etc. Other companies with a value of $1000 to $5000 are Xusheng shares, Sanhua Zhicontrolled, Andering Electronics, etc.

Start price drops to 299,000 yuan home-made Tesla Model 3 supply chain revealed

Assuming that domestic Tesla sales in 2020 and 2021 will be 10, 200,000 units and 2020 and 2021, respectively, for elastic measurements of 150,000 and 300,000 vehicles, respectively.

From the elastic calculation results, the original profit share of Tesla’s higher than the net profit elasticity is greater. In the first half of 2019, Asahi shares represented 52% of Tesla’s sales revenue to its main business revenue, and Model 3 will have a significant increase in its net profit after the domestic sales volume of 100,000 units, with a projected net profit elasticity of 18.4% in 2020 and 14.1% in 2021; With a volume of 150,000 and 300,000 vehicles, net profit elasticity is expected to be 27.7% in 2020 and 21.1% in 2021.

Top’s products for Tesla include a number of products, including lightweight aluminum chassis structures and large body structures, with a large bike value of 9.4% and 7.5% net profit elasticity in 2020 and 2021, respectively, with sales of 150,000 units. Net profit elasticity is expected to be 14.1% in 2020 and 11.2% in 2021.

In addition, Dongyi shares, Baolong Technology and Sanhua Zhiguan, Huayuan Automobile and other companies will also be because of the Model 3 domestic earnings elasticity of about 1% to 3%.

Source:

Oriental Securities “New Energy Vehicle Pattern Reinvented, Tesla’s Domestic Industrial Chain Opportunity”

Fortune Securities “Industry bottoms up, focus on opportunities presented by Tesla’s localization”

Haitong Securities Fundamental Quantification Research (II) – Analysis of Tesla’s Industrial Chain

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