On January 7th, Tesla’s home-made Model 3 was delivered, marking the official beginning of Tesla’s transition to a civilian, popular electric vehicle. It’s reminiscent of Apple’s 2010 release of the popular iPhone 4, opening the door to a smartphone-level transformation. At the same time, the apple industry chain of companies also through the rapid development of Apple, through the bull bear, out of the ten-fold increase.
In fact, Tesla and Apple are highly consistent in product and brand positioning, disruptive industry, production models and business models. In the last five years, Tesla’s annualized compound growth has been as high as 61%. That’s the same as Apple’s compound annualized growth rate from 2008 to 2012. In other words, Tesla is in the same period as the early days of the Apple explosion. With China’s strong policy and financial support, the Tesla industrial chain is expected to replicate in the future, and even surpass the Apple industry chain to China’s manufacturing enterprises.
01 Explore Tesla’s Shanghai Super Factory: Construction is in full swing
Tesla is “entering” the Chinese market at an incredible rate. Tesla took just one year from breaking ground in January 2019, to entering commissioning on October 15th, to January 7th, when the domestic Model 3 was about to be officially delivered. Securities Times e company recently visited the Tesla Super factory in Shanghai, a large number of workers are working on the stitching assembly, a total of six large trucks loaded with Tesla out of the factory gate in half an hour, inside and outside the factory is a busy scene.
Tesla Shanghai Super Factory
In January, the $2 billion Tesla Super factory in Shanghai, Tesla’s first superfactory in China, was built from where the soon-to-be-delivered domestic Model 3 was built. According to Tesla’s plan, the Shanghai plant will integrate research and development, manufacturing, sales and other functions, and is expected to be fully implemented in two to three years. The white facade, the large Tesla Logo is displayed on the outside wall of the workshop, and from the scene, the first phase of the Tesla Plant in Shanghai has been completed. Some building materials were also piled up in the open space near the factory, and facilities such as charging stations were formed. “We’ve been building to 1.5, and we’ve been working overtime all this time. One worker told reporters.
According to previous media reports, The Tesla 1.5 project includes a production plant and an energy center. Tesla also recently disclosed that “we will continue to focus on expanding capacity at the U.S. and the newly built Shanghai Super plant, even though the Shanghai Super plant started construction 12 months ago and we have already produced 1,000 vehicles and are already delivering them.” It also reached a production rate of more than 3,000 units per week, excluding local battery packs that only started production at the end of December. “
At noon, reporters at the scene saw that the workers gradually out of the factory, ready to go across the road to eat. According to the workers, has been working in the factory for two or three months, is currently in charge of the installation of auto parts stitching. At the place of the meal, workers in signwork clothes such as “Shanghai Construction” and “Chinese Architecture” gather edi-as sat.
Tesla factory workers
“The workshop here has been in use for a long time, and every day you can see flatbed cars towing cars through the door. Factory workers told reporters that hundreds of cars were parked on the factory floor and that new cars were being towed to delivery centers or retail terminals across the country every day. At the factory gate, reporters saw a large truck with six cars leaving the Tesla factory with the “Model3” logo printed on the rear of the car. Within half an hour, 36 Model3s were removed from the factory.
The Model 3 Musk, shipped from the Tesla plant, had predicted that Tesla would deliver between 360,000 and 400,000 vehicles in 2019. In the fourth quarter of 2019, Tesla delivered nearly 105,000 vehicles and about 112,000 deliveries, according to the latest data. So far, Tesla has delivered about 367,500 vehicles in 2019, up 50 percent from the previous year and meeting its full-year target.
02 Tesla Experience Store: Queue for a Test Drive on the Weekend
In addition to playing out the “speed and passion” of building the Shanghai plant, Tesla continues to set off the conversation. On January 3rd Tesla announced a price cut of 32,000 yuan to 323,800 yuan for the Chinese-made Model3 Standard Battery Extension. Subtract China’s new energy subsidy of 24.75 million yuan, the price of 299,000 yuan, “breaking through” 300,000 yuan mark.
On the first weekend after the price cut, reporters came to Tesla’s Shanghai Golden Bridge Experience Store, where staff were crowded, and staff said that nearly a hundred customers had booked online in the store on Saturday morning, and that the number of people queuing for a test drive was far more than usual, “now the best time to choose a working day.”
The weekend’s Tesla Experience Store Reporter observed the in-store Model 3, which, unlike the imported Model 3, has the word “Tesla” printed on the rear of the Model 3. It is reported that the domestic Model 3 comprehensive range of 445 kilometers, 100 kilometers acceleration time of 5.6 seconds. “Buying a domestic Model 3 will send a new energy license plate, according to the average price of 9-10 million yuan in Shanghai, this Model 3 is equivalent to saving the owner of a Shanghai license plate money.” Staff said the number of people who came to see the car over the weekend was also about prices and policy.
The domestic Model 3 has three more words in the tail
Domestic Model 3 pre-stocking box
On the issue of model 3 localization, the staff introduced “the parts are now mainly from the United States, in the domestic assembly, because before there is no time to recruit domestic suppliers.” Including the first batch of batteries are imported by Panasonic, may be used in the future domestic batteries, the domestic rate will be higher. According to Tesla, the first delivery of the owner of the domestic Model 3 localization rate of 30%, by mid-2020, the localization rate will reach 70%, the end of the year will achieve a localization rate of 100%.
Experience Tesla accessories on display in-store
Societe Generale believes that under the premise that the cost of direct raw materials is expected to fall by 10%-20% after China’s domestic production, the domestic Model3 is expected to reduce production costs by 20%-28% compared to the U.S. version, and if the pursuit of similar gross margin (about 19 percent) with the U.S. version, the domestic version has 27%-34% of the price reduction space, The absolute price reduction amount is 8.5-108,000. With the massive delivery of the Model 3, Tesla is also expanding infrastructure such as charging piles. Tesla will have 112 super charging stations and 874 charging piles for the whole of 2019. So far, the number of super charging piles built in mainland China has exceeded 2,300, and the number of destination charging piles has exceeded 2,100.
Experience the new car waiting area outside the store
Reporters noted that the V3 super charging pile is built opposite Tesla’s Shanghai Golden Bridge Experience Store. On December 27, 2019, Tesla completed the first V3 Super Charging Pile in Shanghai at the Golden Bridge Super Charging Station and opened it to the public. Tesla staff say the V3 Super Charging Pile can support peak charging power of up to 250kW, more than double the performance of the V2 Super Charging Pile. In the example of the Model 3 long-range version, at peak power, the amount charged in 5 minutes can travel about 120 kilometers, ideally the average user charging time can be reduced by about 50%.
Tesla Super Charging Pile
“With the nationwide mass delivery of domestic Tesla, more super charging stations will open in 2020” Tesla expects to add more than 4,000 super charging piles in China by 2020, double the total number of super charging piles built in the past five years.
The “Tesla Speed” accelerator is a strong support from the Chinese government and banks in all its aspects. On January 10, 2019, the National Development and Reform Commission promulgated the Regulations on the Administration of Investment in the Automotive Industry, which allow ed-owned foreign companies for new energy vehicles to set up factories in China. On the same day, Tesla completed the filing, a key step in building the vehicle qualification. In the second half of 2019, Tesla models will be included in the New Energy Vehicle Vehicle Model Catalog, which is exempt from vehicle purchase tax, and will receive tax relief and subsidies for new energy vehicles. In terms of land, the shanghai factory is only half the market price (1125 yuan per square meter). On the financial front, in March 2019, Tesla received Rmb3.5bn in unsecured loans at 90 per cent of the central bank’s benchmark annual interest rate. Recently, Tesla has received a five-year, 10 billion yuan loan from banks such as China Construction Bank, Agricultural Bank of China, Industrial and Commercial Bank of China and Shanghai Pudong Development Bank, at an interest rate of only 90% of the one-year benchmark rate, or 3.915%, which is equivalent to “the lowest rate that the best state-owned enterprises can get.”
Tesla is a $2 billion direct supplier (more than 2,000) and an $800 million indirect supplier in California, according tomedia. Similarly, with the construction of the Shanghai plant, will strongly promote the development of the domestic new energy vehicle industry chain.
03 Deconstructing Tesla Industry Chain: Power Battery Link Highest Value
In 2018, a German engineering company purchased and dismantled the Model 3. According to its analysis, the total value of model 3 models is divided into three parts, namely, three power (electrical control, power battery, vehicle controller), automotive electronics and body chassis interior and exterior decoration, each part accounted for about 5:3:2. Unlike traditional car companies, Tesla’s suppliers are not divided into Tier 1, 2 and other sequences, only direct suppliers and indirect suppliers, reducing the hierarchy. According to statistics, in Tesla’s supply chain, direct and indirect involving more than 130 suppliers, Chinese enterprises accounted for more than half. Although there are many Chinese enterprises, they are few direct suppliers, most of them indirect suppliers, and concentrate on relatively low-value parts, body parts, interior and exterior parts. Overall, Tesla supply chain, the battery sector by Japanese manufacturers, the core hardware such as chips, millimeter wave radar and so on is still mainly in Europe and the United States manufacturers, the most critical BMS (battery management system), motor control and other control technology is Tesla’s independent research and development.
According to the split, the power battery assembly link accounts for about 40% of the value of the Tesla Model 3, which is the most competitive core of Tesla’s electric vehicles, making its battery life far beyond that of its peers. The suppliers in this section are mainly Japanese manufacturers and Tesla independently developed. Specifically, power batteries account for about 30% of the value, thermal management systems and BMS each account for 5%, 3%. Tesla’s battery supplier is Panasonic, which plans to introduce LG Chemical due to Panasonic’s capacity bottleneck, according to an interview with Tesla associates. In the field of thermal management systems and BMS, the solutions and designs are done by Tesla itself, and most of the company’s patents are concentrated here. Tesla optimizes the cell, which maximizes the energy efficiency of the battery monomer while ensuring the basic quality of the cell. Tesla’s battery management system involves a number of proprietary algorithms that allow Tesla to last as far as possible with batteries of the same weight, according to a leading analyst in the automotive industry. And low-temperature environment, the range of travel is not much, also do not need to rely on diesel heating. Tesla’s BMS technology is currently the number one in the automotive industry.
The value of the automotive electronics segment accounts for about 30%, half of which is a visual computing processor, Tesla sources told e. Application chips have been gradually replaced by Nvidia for their own production. According to researchers at Guojin Securities, Tesla’s Autopilot (Autonomous Driving) technology is relatively mature, supplemented by OTAs on a hardware basis, and collecting data on sold cars to continuously optimize ADAS performance, combined with a highly integrated electronic architecture, is definitely ahead of the current layout of other vehicle companies.
The body, interior and interior and chassis sections account for about one-fifth of the value, of which the body and interior and interior decoration, chassis each accounted for half. The difference between this part and electric vehicle fuel vehicle is not big, and the technical content is not high, is capital-intensive. At this stage is in the domestic replacement, at present, into the Tesla industrial chain of domestic enterprises are mostly concentrated in this link, to aluminum casting industry as the representative.
04 Domestic enterprises are mostly concentrated at the bottom of the Tesla industrial chain
Overall, the domestic companies currently on Tesla’s supplier list are mostly concentrated in the interior and exterior parts of the smaller body chassis, and even those entering Tesla’s high-value areas are also providing parts and parts at the bottom of the industry chain. With the operation of Tesla’s Shanghai Super plant, the localization industry chain is supporting or continuing to grow.
In Tesla’s core battery space, the Ninder era has reached a preliminary battery supply agreement with Tesla, but has yet to really break into the Tesla industry chain, Bloomberg reported. “Tesla has a big chance of switching its battery supplier to LG because of capacity issues, so it is recommended to prefer the LG industry chain in the battery segment,” said one autoindustry analyst at a large brokerage. “It is understood that LG battery materials are highly local, including electrolyte procurement Cathay, New Zeus, negative-pole procurement of Yan Tailai, fir, battery part diaphragm Enjie shares, battery structure parts procurement of Kodali and so on.
For Tesla’s other core areas: thermal management system and BMS, the entry of manufacturers include Yusheng Electronics, Sanhua Zhitube, etc., mainly parts suppliers. Sanhua Zhicontrolled has said that its company Sanhua Auto Zero for Model3 exclusive supply of 7 thermal management parts projects, with solenoid valve thermal expansion valve, electronic expansion valve, electronic oil pump, oil cooler, water cooler, battery cooler, pressure block, the value of the bicycle 2000 yuan. And the company’s exclusive supply of ModelS and X and electronic expansion valves, the value of the bicycle about 250 yuan. The company has said it supplies Tesla with passive safety, window buttons, BMS sensors and battery circuit protection systems.
Automotive electronics part, domestic listed companies, are the main supply of sensor parts HMI control category and automotive safety products;
In the automotive industry, for the body, interior and exterior decoration and other low technical barriers, relying on the cost of manufacturing properties industry, due to labor, raw materials cheaper and other factors, most domestic manufacturers relative to international manufacturers have mastered the relevant technology and more cost advantages, there are a number of manufacturers in this link into the Tesla supply chain. Several brokerage analysts said that as Tesla’s demand fell, domestic manufacturers have a better chance of further increasing their supply to Tesla in the future.
In the body system part, the domestic enterprises entering the Tesla supply chain mainly include: Huayuan automobile supply body assembly, side circumference, back cover mold and other products; In the field of internal and external decoration system, Huayuan car supply seat chair, bumper and other products, Minmei shares supply sun visor and other products, are superior electronic supply driver airbags, steering wheel and other automotive safety system products, Ningbo Huaxiang supply trim and other products. In the chassis section, The Top Group supplies lightweight aluminum chassis structures, large body structures, etc. to Tesla, and Paulon Technologies supplies TPMS products.
05 Disruptor dividend spawns the next “Apple industry chain”
“Tesla has pushed a software upgrade package to users, adding a number of games and video playback capabilities,” Musk said in a recent media interview. In the future, car owners will be able to drive on the road to self-driving, they can play games, watch video, deal with things, the future is not far. As can be seen, Musk’s definition of a Tesla vehicle is a “computer on four wheels” using new energy sources. Given Tesla’s current technology and sales momentum, Tesla’s big chance of becoming a successful disruptor is just as much as Apple’s re-emergence as it redefines the phone.
Thanks to Apple’s rapid development, the Apple industry chain has contributed almost ten times the number of A-shares in the past decade. Seven years ago, apple had only eight of its 156 suppliers in mainland China. Apple’s 2019 global top 200 suppliers have nearly tripled the number of suppliers in china’s Apple industry chain, with the number of suppliers rising to 15%. Tesla and Apple are highly consistent in product and brand positioning, disruptive industry, production models and business models. Its industrial chain is expected to replicate or even surpass the Apple industry chain to China’s manufacturing enterprises in the future.
For now, companies with higher percentages of Tesla’s revenue and orders are likely to benefit from Tesla’s rapid growth. In terms of revenue, Asahi shares are the most typical A-shares, the earliest entry into the Tesla industrial chain, more than 50% of revenue from Tesla orders. In the first half of 2019, Tesla’s orders generated revenue of 262 million yuan, or 52%, for Asahi shares. Initially, Asahi shares entered its supply chain through a small-volume custom model, followed by a further deepening of cooperation for Tesla to supply the main transmission box, battery pack housing, etc., the supply of Model 3 aluminum alloy die castings of the bicycle value of more than 2000 yuan.
There are two possibilities for a high value of bicycle supporting, one is the supply of products more core, high unit price, and the other is its own product line rich, after the initial cooperation can expand the supply of product categories, each piece unit price is relatively small but the number, many kinds. Take Top Group as an example, because of the many types of products, so that its factory in Shanghai Model 3 bicycle matching value of 5000 to 6000 yuan.
Comparing the evolution of the Apple industrial chain, the future investment space brought about by the Tesla industrial chain may be concentrated in: parts replacement and new technological changes brought about by the opening of the market.
At present, Tesla parts suppliers still have a largeproportion of joint ventures or foreign brands. With the increase of the demand for cost reduction, the Advantage of the Yangtze River Delta Auto Zero Industry at close range of The Shanghai plant may increase further. A brokerage auto industry analyst said, relying on China’s largest car manufacturer SAIC Group, Jiangsu, Zhejiang and Shanghai have formed a more mature industrial chain, the Shanghai plant required most of the parts can be covered. Securities Times e reporter combing currently into the Tesla Model 3 supply chain of the main parts manufacturer location, basically located within 500 kilometers of the Shanghai factory.
In addition, due to the current car market depression, car promotion efforts to increase the compression of the profit margins of the whole machine factory, the whole machine factory had to push upstream prices to reduce costs, resulting in the result is that the original solid industrial chain supply system is being broken by interests, the whole machine factory for their own interests are more inclined to use cheap domestic parts. Similar to the demonstration effect of apple industry chain, Tesla’s supply chain has boosted the company’s recognition and is expected to receive orders from other car platforms. Take Sanhua Zhicontrolled, for example, after entering Tesla’s supply chain, it has taken orders for parts from Volkswagen, GM, Volvo and other auto companies totalling 14 billion yuan.
Similar to the trend of large-screen smartphones replacing ordinary phones, Tesla has brought new technological changes such as new energy-fired batteries and self-driving systems, or prompted new industry leaders in the country’s new segments. “For new technologies, due to the uncertainty of the technology route and the lack of a strong supply chain relationship, domestic parts companies have the time and space to make achievements in the segment, making overtaking a leader in the segment,” an automotive industry analyst told e. In this regard, the analyst recommended that we can focus on tire pressure monitoring and millimeter wave radar systems, vehicle networking, hydrogen fuel cells and other fields have a certain accumulation and influence of enterprises.
In addition, the explosion of Tesla will have a “fishing effect” on the new energy vehicle market. 2019 is a turning point in the electric vehicle industry, subsidies significantly reduced the slope to drive the industry into the era of micro-subsidies, the domestic new energy industry more widely shuffling is coming. Fortune Securities research report pointed out that Model 3 good performance is expected to change the current market on the domestic new energy vehicles low quality, unreliable or deceptive subsidies of the inherent negative impression, played a role in consumer electronics Apple’s role as a model, will promote the domestic new energy vehicle brand product strength, enhance the penetration of new energy vehicles in the overall market.