Tesla announced on January 4th that the Chinese-made Model 3 would be delivered on Apr 7. The price of the Model3, made in China, was cut again, falling below the 300,000 yuan mark from 299,000 yuan per vehicle after deducting subsidies. According to Data from Tesla, a cumulative total of about 367,500 vehicles were delivered in 2019, up 50 percent year-on-year and meeting the full-year delivery target of 360,000 vehicles.
Industry insiders point out that Tesla’s local production will boost the domestic market. According to the 2021 Tesla to achieve 300,000 vehicles, the value of the bicycle 300,000 yuan estimated, the battery, materials, high-voltage DC relays, thermal management system and other links are expected to bring more than 40 billion yuan market space. Three types of investment opportunities in the supply chain are worthy of attention, including enterprises with high technical barriers, leading products and strong matching certainty, enterprises with significant elasticity of marginal effects of revenue and profit, and enterprises that have supplied or potentially supplyed components.
Tesla shares hit new highs
On January 3rd, Tesla released vehicle production and delivery data for the fourth quarter of 2019. Of these, 104,900 electric vehicles were produced in the fourth quarter and about 112,000 were delivered. For the full year 2019, Tesla delivered about 367,500 vehicles, up 50% year-on-year.
In terms of models, model3 delivered 92,550 vehicles in the fourth quarter of 2019, with a full-year delivery of 301,000 units, up 53% YoY, while ModelS/X production delivered 19,450 units and 67,000 units for the full year, down 33% YoY. Tesla says the Shanghai superplant, which has produced nearly 1,000 vehicles for sale and has a capacity of more than 3,000 a week, has broken ground in less than 12 months.
Analysts say Tesla’s deliveries are a close concern, a barometer of the company’s performance.
Tesla’s share stake hit another record high, driven by sales growth. On January 3rd it rose to $454 a share at the close of $443.01. Tesla’s stock has risen 30 percent in the past month to $79.85 billion, outpacing traditional auto giants such as Hyundai, Ford Motor Co. , General Motors, BMW and Daimler.
Local production brings room for price reduction
On January 7th the Chinese-made Tesla Model 3 will officially open its scale delivery. On December 30, 2019, the Model 3 produced by Tesla’s Super factory in Shanghai, China, completed a small delivery of internal employees. That’s well ahead of Tesla’s forecast for the first quarter of 2020.
At the same time, Tesla’s domestic price cuts exceeded market expectations. Tesla announced on January 3rd that it would adjust its full model 3 sales policy in China, and that the domestic base version of the Model 3 would be reduced from 355.8 million yuan per vehicle to 323,800 yuan per vehicle.
On December 6, 2019, the Ministry of Industry and Information Technology announced the 11th edition of the 2019 List of Recommended Models for the Promotion and Application of New Energy Vehicles, with a total of 146 newly released models on the list, including model 3 models from Tesla’s Shanghai Super plant. At the current price, each domestic Tesla Model 3 will receive a subsidy of 247,000 yuan.
On December 27, 2019, the Ministry of Industry and Information Technology announced the latest batch of “new energy vehicle models exempt from vehicle purchase tax catalog”, the domestic Tesla Model 3 is among them. This means that the domestic Tesla Model 3 will be further exempt from vehicle purchase tax on the basis of the above subsidies.
After enjoying the exemption from the purchase tax policy and the subsidy of new energy vehicles, the domestic Model3 base version of the subsidy after the sale price of 299,000 yuan / vehicle, fell below the 300,000 yuan mark.
According to a study released by Societe Generale, the gross margin of the Model3 made in China is significantly higher than that of the Model3 made in the United States; Societe Generale expects the domestic Model3 to have 27%-34% room for price cuts. That means further price cuts are likely in the future as Tesla’s supply chain becomes more local.
China’s Manufactured Tesla Model3 is seen as a boost to the entire industry chain and a new wave of domestic electric car buying, as subsidies for the new energy car market are cut, sales are falling and new forces are struggling to make capital. China Merchants Securities believes that in the new force of car construction, Tesla invested heavily, accumulated deep, supply chain integration capabilities have a clear advantage. Tesla’s strong performance in recent years has greatly stimulated the electric investment of traditional car companies. If The success of Tesla’s China plant, it could further spur overseas car companies to invest more in electricization.
Increased participation of domestic suppliers
What does Tesla’s plant in China bring to the domestic auto industry? Analysts at Guotai Junan say the biggest change is the localisation of the supply chain. This will bring a clear increase to domestic supply chain-related enterprises. “Unlike the mobile phone industry chain, the automotive industry chain is much longer in length and depth than smartphones, and the list of suppliers that are expected to continue to benefit will be longer. “
From the current situation, Tesla’s core first-level suppliers from Europe, America, Japan and other places, domestic enterprises as a second-level suppliers. For example, Tesla’s lithium battery PACK is currently manufactured by Japan’s Panasonic, positive materials and diaphragm suppliers are Sumitomo Chemical of Japan, and the anode materials supplier is Hitachi Chemical of Japan, and electrolytes are produced by Mitsubishi Chemical of Japan.
But that may change. According to media reports, LG Chem is expected to match Tesla’s Shanghai plant power edgy batteries. This means that Tesla’s power battery supplier sits back to Panasonic or into a panasonic and LG chemical supply. The domestic supply chain for LG Chemical is expected to become Tesla’s largest domestic sub-supply chain.
Specifically, Tesla’s supply chain includes powertrain systems, electric drive systems, charging, chassis, bodywork, central control systems, interiors and exteriors, involving more than a hundred direct and indirect suppliers.
Analysts at Guotai Junan believe that as Tesla’s electric car capacity in China gradually expands, the Tesla Model 3’s batteries, motors and parts housings are generating strong demand for raw materials in the industry chain. “Upstream raw materials cobalt, manganese, nickel, lithium, graphite, the middle and lower reaches of the connector will produce a greater demand for kinetic energy. China’s charging equipment manufacturers, operators, integrators and so on are expected to further improve participation, the entire power battery industry chain will benefit. “
Shen Wanhongyuan Securities said Tesla’s local production will create a huge domestic market space. According to estimates, assuming that Tesla will achieve 300,000 vehicles in 2021, the value of the bicycle is 300,000 yuan, the battery, materials, high-voltage DC relays, thermal management system and other links are expected to bring more than 40 billion yuan market space.
Citic Securities believes that Tesla’s local production, from the plant, staff compensation and power battery industry chain can reduce costs, car prices will drive a significant increase in demand. Domestic Model3 sales are expected to reach 120,000 to 150,000 units for the full year. It is recommended to keep an eye on the opportunities presented by Tesla’s supply chain. According to the supporting supply situation divided into three categories, including high technical barriers, product leadership, supporting certainty, such as Sanhua Zhiguan, Ningde era, Hongfa shares; Ningbo Huaxiang and so on.