Domestic Tesla expected to sell up to 150,000 vehicles a year

In the wet and cold winter rain in Shanghai, Tesla received the first domestic electric car Model 3 mass delivery. First Financial Reporter witnessed the delivery ceremony of the Model 3 at the Tesla Super factory in Shanghai. The delivery ceremony took place in the Tesla Model 3 production floor, where the first financial reporter saw a Model 3 production line parked in several Tesla Model 3 vehicles. It is understood that the factory has thousands of employees into the Production Line of Tesla’s Port-of-Port plant.

Domestic Tesla expected to sell up to 150,000 vehicles a year

Tesla is the largest foreign-funded project in Shanghai’s history and the first wholly foreign-owned car project, which is expected to become the new automotive industry.

“2019 means a lot to Tesla, and the opening of the Tesla Super plant a year ago is inseparable from the government’s support and the efforts of its employees,” Tesla CEO Elon Musk said at the delivery ceremony. In the future, Tesla will go deep into China, promote energy restructuring and promote the development of shared cars. “

Musk, who also launched the Tesla Model Y project, said Model Y could sell more in the future than all other Tesla models combined. Musk said he was looking forward to Model Y’s advanced manufacturing technology.

Model Y mass production earlier than expected

According to First Financial Reporter, Tesla is likely to accept reservations from Chinese consumers on the day the Model Y project starts. Tesla announced the Chinese pre-sale price catalog shows that the U.S. version of the Model Y has three models, long-range after-drive version starts at 444,000 yuan / vehicle, long-range full-drive version starts at 488,000 yuan / vehicle, high-performance full-drive version starts at 535,000 yuan / vehicle, are significantly higher than the U.S. market price.

According to Tesla’s latest 2019 delivery data, the Model 3 accounts for 83%. The market expects SUVs to become more popular in places like China, where consumers are willing to pay more, even though model Y is more expensive than the Model 3.

However, domestic Tesla delivery is in the cold winter of the car market. China’s auto sales are entering a third consecutive year of decline, With new energy vehicle sales accounting for only 5% of all vehicle sales, the decline of new energy vehicle subsidies has left the future of the electric vehicle market facing uncertainty this year. Tesla still has many challenges to overcome if it is to ignite consumer enthusiasm for buying electric cars.

Domestic Tesla expected to sell up to 150,000 vehicles a year

The market can’t be the same as the same

Analysts at LMC Automotive, an automotive research firm, believe Tesla’s entry into China’s electric car market ahead of its global rivals is a test of its conquest of the Chinese market. But now China’s new energy (4.910, 0.02, 0.41%) car market is different from when Tesla decided to enter China in mid-2018.

Sales of electric cars in China plunged 42 per cent in November. According to LMC Automotive, domestic Tesla could sell as little as 21,000 vehicles this year in an overall tough market. That’s far less than Tesla’s current planned Chinese production. Tesla’s latest delivery figures show that The Shanghai superplant now has a capacity of 3,000 vehicles a week, meaning it can produce 150,000 vehicles a year.

LMC Automotive’s estimates are based on past delivery delays caused by Tesla due to supply chain constraints, the complexity of production processes and product quality controls.

However, data from other research departments are more upbeat, with consultancy AutoForesight forecasting domestic Tesla sales of 100,000 vehicles and China International Capital (CIC) forecasting a combined sales of 120,000 models this year. Dai Chang, an analyst at Henyep Securities Automotive Research, told First Financial that domestic Tesla is expected to sell 150,000 vehicles this year. Sales of 150,000 vehicles are almost three times higher than Tesla’s, almost as much as BYD, which sold 120,000 new energy vehicles in the first 11 months of last year.

Although Tesla has previously reiterated to First Financial that the Shanghai plant is a production line of four full-size processes, not just a assembly plant. However, Robin Zhu, an analyst at Sanford Bernstein, a research firm, told First Financial that the first half of Tesla’s Shanghai plant is expected to be CKD mode, a domestic assembly model for imported parts. Tesla is expected to basically localize its supply chain by the end of the year.

There’s still room for a 20% price cut.

Tesla just announced a price change for the Chinese-made Model 3 over the weekend, cutting the price of its base car from 355,800 yuan to 323,800 yuan , including the basic ride-assistance feature, by 9%. At the same time, according to national policy, the entire Model 3 can enjoy the purchase tax exemption policy, as well as 24,750 yuan of new energy subsidies, After the Chinese model 3 subsidy price of 299,000 yuan, fell below the 300,000 mark.

In response, some analysts believe Tesla may be looking to take the lead in gaining as much market share as possible when it enters the Chinese market early on, sacrificing some of its profits. However, according to Henyep Securities estimates, Model 3 compared to the U.S. version of production costs reduced by 20% to 28%. Excluding the 9 percent price cut, the domestic Tesla achieved the same gross margin as the U.S. version, and about 20 percent of the price reduction space.

Tesla’s price range is still much higher than that of domestic electric cars. According to Sanford Bernstein, about 70 percent of electric car sales in China are now purchased by non-individual customers, such as taxis, ride-sharing services companies, government fleets, and so on, who rarely choose Tesla-rated electric cars and prefer to buy cheaper ones.

But that concern may not be the biggest contradiction in China, where the growing number of middle-class people, a car of around 300,000 in a big city is not unacceptable. But the problem for Tesla is how long it can maintain its current advantage.

ABB’s army is entering.

Traditional car giant ABB (Audi, Mercedes-Benz, BMW) is entering the market. Volkswagen’s Audi plans to sell nine new new energy vehicles in China over the next two years, more than half of which are electric. The Audi E-Tron went on sale in November, with a starting price of 693,000 yuan. Daimler’s Mercedes-Benz brand launched the high-end electric vehicle EQC last October, starting at 580,000 yuan, and BMW plans to start working with Chinese partners next year to produce the electric mini and iX3 hatchbacks.

But compared with these traditional car giants, Tesla has the advantage of not having to take into account the contradictions in the sales of traditional cars and new energy vehicles. “Other car giants are moving more slowly into the new energy sector, and they don’t want to sell new energy vehicles because it will take away the share of high-margin fuel vehicles. Bill Russo, founder of Automobility, an automotive consultancy, told First Financial.

“Tesla’s third quarter was a huge success in China, and it is worth watching how Tesla’s market position in China evolves. Roland Berger partner Johan Karlberg told First Financial. In November alone, the number of Teslas registered in China doubled 14-fold from a year earlier to 5,597.

“But overall sales of new energy vehicles in China were falling last year, and is Tesla cutting prices because of efficiency-driven (lower costs) or market demand-driven (consumer willingness to buy)?” Is the current price sustainable? Does Tesla’s short-term goal in China have higher expectations for sales? How do sales networks and services keep up? These are all questions Tesla needs to answer. Karlberg told First Financial.

At present, in the global electric car market, only Tesla has really formed a scale effect. Between January and November last year, Tesla accounted for 13% of the global market for all-electric vehicles, well above the second-ranked BAIC EU series of 5%, and by BYD, Nissan Leaf and SAIC Baojun E-Series all had 3% market share.

In China’s electric car market, the top three are BYD, BAIC and Geely. “The biggest problem for car makers is how to differentiate the competition,” Stephen Dyer, managing director of Alixpartners, a consultancy, told First Financial. “