Tesla’s “fishing effect” in China is becoming more apparent. From the opening of Tesla’s Shanghai Super factory in January 2019, to the first Tesla domestic Model 3 delivery on December 30, the launch of the domestic Model Y project, to the expansion of 3,000 vehicles per week at the Shanghai plant, Tesla’s domestic trains are accelerating.
Musk has previously said that in addition to the Model 3 and Model Y, Tesla will make other models in China in the future. In other words, Tesla vehicles will increase the rate of localization on a larger scale and to a higher extent.
In this process, the market called the next “Apple industry chain” of the domestic Tesla industry chain is also continuing to heat up. Previously, some domestic enterprises have joined Tesla’s circle of friends, the current domestic Model 3 parts domestic rate of 30%. Tesla aims to fully domesticize the parts of the model by the end of the year.
Recently, Ningde times, Huada Technology, Dusheng Electronics, etc. have announced the cooperation with Tesla’s Shanghai plant.
Tesla blows up local assembly number
Based on Tesla’s 2019 results, 367,500 vehicles were delivered for the full year, up about 50 percent from a year earlier. The Model3 was delivered more than 300,000 vehicles, accounting for more than 80% of all deliveries.
That’s enough to be proud of the many new car-building forces, and Musk certainly has to take the lead.
At present, the price of the domestic Model 3 has been down to the 300,000 yuan mark, but industry insiders believe that the Tesla Model 3 still has room to reduce prices. And the car parts are an important part of the price reduction, which is why Tesla wants to achieve 100 percent domesticated vehicles.
Tesla’s Shanghai plant
On the one hand, Tesla’s production in China can significantly reduce labor costs. On the other hand, local production in China will eliminate tariffs on some parts and reduce transportation costs. In addition, the expansion of the production capacity of Shanghai Super Plant can further play the advantage of scale, to level the overall research and development production costs.
Tesla’s domestic Model 3 has 27%-34% room to cut prices after adopting a domestic supply chain, according to a new study by Societe Generale.
At present, Tesla Shanghai factory off-line vehicle parts localization rate of 30%, up to 80% in the middle of this year, the end of the year will achieve full domestication, will undoubtedly further drive the domestic new energy vehicle supply market.
Previously, most of Tesla’s core technology suppliers came from Japan, the United States and Europe, such as the powertrain system lithium battery positive and negative materials from Japanese companies Sumitomo Chemical, Hitachi Chemical, the chassis of the electric power steering using Bosch products.
Domestic companies have also been mostly as secondary raw materials suppliers into Tesla’s supply chain system. But as the localization rate increases, tesla’s first-tier suppliers are becoming more and more domestic.
The Ningde era has attracted much attention
Of the newly promoted tier one suppliers, the Ningde era is the one that is the most watched. Prior to the Ningde era and Tesla many times out of cooperation “gossip”, but by the Ningde era denied, delayed the progress.
Finally on February 3rd, the year of the rat, the cooperation between the two sides hammered the tone. The Nande Times announced an agreement with Tesla to supply lithium-ion powered battery products to Tesla, with a validity period from July 1, 2020 to June 30, 2022.
Batteries are one of the most important components for electric vehicles. Data show that the power battery assembly system accounts for 38% of the value of the Tesla Model 3.
Tesla has been working with Japan’s Panasonic battery for nearly a decade in the battery sector, but there is some friction over the Model 3’s battery supply. Musk has publicly accused Japan’s Panasonic of slowing the efficiency of its plants, limiting production of the Tesla Model 3. Coupled with Tesla’s continued use of cylindrical batteries, the low energy density of the cylindrical battery pack has also constrained the development of Tesla cars to some extent.
In contrast, Ningde era as the largest power battery enterprises in China, has a certain degree of local advantages and market advantages.
Prior to the partnership with Tesla, the Ninder era had partnered with more than 20 domestic and foreign vehicle manufacturers, and in 2019 it had a installed capacity of 31.71 GWh with a market share of 51.01%.
At present, the Ningde era is accelerating production expansion, with the Ningde Lake West Base, Jiangsu Puyang Base, The Times SAIC, Europe plant production, by 2026 Ningde era total production capacity is expected to reach 100GWH.
What’s more, the Ninder era could be solved by the cylindrical battery problem that previously restricted Tesla cars. The CTP technology battery pack volume utilization introduced by Ningde era last September can be increased by 15%-20%, the number of battery pack parts reduced by 40%, the productivity increase by 50%, and the energy density of the battery pack by 10%-15%, which will greatly reduce the manufacturing cost of the power battery.
The partnership between Tesla’s Shanghai plant and the Ningde era makes sense, both in terms of capacity supply, battery technology, and battery costs.
Earlier, the 2019 earnings forecast released by the Ningde Times in January showed that the company expects to achieve a net profit of RMB4,064 million-4911 million in 2019, up 20%-45% YoY. Ningde times said that the rapid development of the new energy vehicle industry, power battery market demand compared with the same period last year has increased is one of the reasons for the company’s benefits.
Will the partnership with Tesla bring significant benefits to the Ningde era? I can’t say for sure.
Because Musk has previously revealed that the current cooperation with the Ningde era is a “small-scale” cooperation. The Ninder-era announcement also showed that the specific purchases of the partnership with Tesla will be determined by order based on their own needs, and that the agreement does not impose mandatory restrictions on Tesla’s purchases.
The future benefits are hard to say, but as Tesla’s stock surges, the Nande-era stock has also risen to the naked eye. As of the close of trading on February 18, Ningde’s share price had closed at 156.62 yuan per share.
On February 19th Tesla was in talks with the Ninder era about using cobalt-free batteries at its Chinese plants. If it finally lands, it means that the LFP (Lithium Phosphate) battery is entering the Tesla production line for the first time, and is expected to further reduce production costs.
Tesla expands circle of friends
In addition to the Ningde era, among the new players, Huada Technology, Yusheng Electronics and other listed companies are also attracting attention.
Huada Technology’s main business is for passenger car stamping welding assembly, engine tube strains and related mold development, production and sales. At present, mainly for the major domestic vehicle manufacturers to provide automotive body parts, engine assembly tube strains and other stamping and welding products.
On the evening of February 6, Huada Technologies announced that it had officially become a supplier to Tesla on May 29, 2019, providing tesla with body punching. The announcement was made only recently because the supply contract with Tesla did not meet the disclosure criteria.
Wada Has signed contracts with Tesla to supply models such as model 3 and ModelY, and has begun to supply them. According to Huada Technology’s winning bid products and Tesla’s current production capacity estimates, the company is expected to 2020 Tesla-related operating income of about 100 million yuan, about 2.5% of the company’s 2019 operating income, the company’s 2020 operating results have a small impact.
Although the new entrant is the first time to get tesla’s order, the current co-operation volume is not large, but in the future with the domestic Model 3, ModelY orders rise, Huada Technology is also expected to burst out of greater market potential.
Both Wins Electronics
By contrast, the total amount of Tesla orders received by The Electronics was larger.
It is reported that Bothin Electronics mainly in the field of new energy vehicles to provide battery management systems, battery management systems, car chargers and other products, customers including Mercedes-Benz, BMW, Porsche, Volkswagen and other international vehicle brands.
On February 6th, Both Sun Electronics announced that its subsidiary, Shanghai Lingang, had officially identified itself as a supplier of Tesla’s China Model3 and ModelY models, providing them with automotive safety system products such as steering wheels and airbags.
According to the announcement, if based on Tesla’s domestic Model 3 and ModelY annual production of about 300,000 vehicles to account, this new project order will bring about 1.5 billion yuan to the port of Hong Kong is sheng security. Port-bound swin safety will start to gradually supply it in 2020, the order life cycle is about 3 to 5 years.
To fully support Tesla’s production, the 60,000-square-meter plant, built next to Tesla’s Shanghai plant, is just 3 kilometers away, and recently followed Tesla’s Shanghai plant back to work on February 10.
Previously, the automotive safety division of Bothin Electronics has been equipped with a full range of passive safety systems and other products for Tesla’s full range of models, and so far the Automotive Safety Division has received a total order of about RMB 6 billion for Tesla.
At the same time, the automotive electronics division of Sunelectronics is also a global supporting HMI (Smart Driving Business) controller and related sensors and other products, currently received a total of approximately RMB 1.5 billion from Tesla orders. The two orders, which total about RMB7.5 billion, will also be gradually mass-produced over the next three to five years.
Can domestic new energy vehicle parts enterprises follow the take-off?
Although the domestic new energy vehicle market has been very hot, but the parts industry has been in a weak position.
In September last year, Chen Qingtai, chairman of the China Electric Vehicle 100 Association, pointed out at a conference that domestic auto companies are not paying enough attention to the underlying components and investing, so in the past the era of fuel vehicles experienced the hollowing out of component technology.
Zhang Yongwei, secretary-general and chief expert of china’s 100-person electric vehicle association, also pointed out that domestic new energy industry clusters have not developed at this stage. “China’s total zero ratio is about 1 to 0.1 to 0.2, that is, 100 billion vehicles with only 10% or 20% of the component system. “
Therefore, in the new energy vehicle track, the development of parts will also determine the future direction of China’s automotive industry.
And those who seize the opportunity of the players, has achieved initial results. Ningbo Xusheng, a supplier responsible for automotive aluminum die castings in the lightweight supply chain, for example, has been upgraded to “Tesla’s Top 10 Suppliers in the World” since 2013 as an accessories supplier.
In addition, some companies that have previously partnered with Tesla, such as Dongshan Precision and Sanhua Intelligence, are also growing. The power battery industry’s Ningde era and BYD need not mention much.
Although Tesla’s entry into China has put no small pressure on the country’s new car-building forces. But in terms of the entire domestic new energy industry chain, Tesla this catfish, can better invigorate the entire fish pond.
Tesla’s domestic supply chain is rapidly building, so that the domestic new energy industry chain presents more vitality, especially in the car market slump and affected by the outbreak.
Tesla’s build-up number has been blown, the domestic new energy industry chain enterprises are ready to catch the fast train?