Again, the biggest issue for local electric vehicles is the overall improvement of vehicle conditions and how to compete for the market from fuel vehicles.
How important is Model 3 production in China to Tesla? At least for Tesla CEO Musk, it was enough to make him happy to dance at the delivery ceremony. Tesla’s stock price has almost doubled in the past three months. Others may not be happy about the dance-local electric car companies. Their products have ushered in their scariest competitors before they have won the market. Many analysts believe that domestic Tesla will overwhelm domestic electric vehicle startups.
Tesla’s stock price has almost doubled in the past three months.
The competitive relationship is obviously obvious. For example, Weilai has directly stated that its pricing strategy will take into account the Tesla Model Y for the third production car planned. However, think calmly, the domestic Tesla listing may have more opportunities than threats for local electric vehicle manufacturers.
Spillover Effect of Tesla
Tesla claims that the current Shanghai plant has a production capacity of 3,000 units per week and is confident to fully utilize its production capacity, which means that Tesla expects Model 3 sales to exceed 10,000 units per month. Now China has sold less than 100,000 pure electric vehicles a month. Among them, there are very few models at the price of 300,000 yuan like the Model 3. In other words, although the Model 3 will snatch some potential owners of new energy models, its more value may be the cake that drives the entire electric vehicle market.
At this stage, China’s electric vehicle market is far from the point where manufacturers need to be concerned about market share being robbed by rivals, because the overall size of this market is still too small to meet expectations. The first priority for the entrants at this time should be to concentrate on expanding the incremental market.
Only when more green new energy vehicle licenses appear on the road and more charging piles appear in parking lots will more and more people accept electric vehicles. This process requires the promotion of policies and the stimulation of star models. If the Model 3 is popular, then it at least proves an accepted market segment for electric vehicles, and other brands can meet the demand for Model 3 overflow as long as they introduce competitive models.
Differentiation advantage of Tesla
Tesla’s leading position in the domestic electric vehicle market is not fixed. Tesla is not perfect. As a new car, the shortcomings of the Model 3 being criticized by the owner are not small. And these shortcomings are exactly what Chinese consumers are most concerned about when buying a car, such as interior configuration and workmanship. You can’t use “luxury” to describe the interior space of the Model 3, it can only be said to be simple. In addition, since the Model 3 went on the market, there has been a lot of feedback about its rough workmanship. Tao Yuanting, who bought an imported version of the Model 3 last November, told YiMagazine that when her new car was delivered, there were minor faults such as defective window glass rubber seals, and after she got the car, she knew the sales introduction of 480km battery life. Mileage is “ideal” and actual conditions are “discounted”.
Good-tempered Tao Yuanting accepted Tesla’s explanation and repair plan. After all, her consumption logic is clear: electric cars are suitable for her, and Tesla is the best electric car brand in her mind. However, in other brands, these problems are enough to trigger a small after-sales crisis, and word of mouth decline. With the rapid increase in the number of vehicles and the aging of models, similar problems with Model 3 will only increase. The details of the interior and the human-computer interaction in the car are exactly what the local electric car is good at. As the electric vehicle market expands, these advantages will attract consumer attention.
Tesla delivers Model 3 to 10 social car owners.
Brand disenchantment of Tesla
The reason why the domestic Model 3 can receive attention is because of Tesla’s strong brand influence. “You can drive Tesla for less than 300,000 yuan”, which is very attractive to many consumers. As Model 3 (and future Model Y) becomes Tesla’s main model, its average new car price and luxury brand impression in China will gradually decline. This is not a bad thing for Tesla, but it will dispel it. .
At that time, it will no longer be a special brand with many auras such as “environmental protection”, “geeks”, “cool” and “luxury”, but one of many electric vehicle brands. Buying 300,000 Tesla is destined not to give people a sense of leapfrogging. This has also appeared on luxury brands such as Audi. Of course, Tesla’s brand power should still be the strongest in electric vehicles, but in the future, this leading edge will not overwhelm other brands.
Supply chain impact
At present, Tesla can only be regarded as “semi-domestic” in China. Although the entire vehicle is assembled in China, most of the parts are imported from abroad. It aims to use 100% of local parts suppliers by the end of this year. Commitment to enhance the capacity of the local supply chain, which is why the local government has given unprecedented support to Tesla’s Chinese factory-it has received unsecured loans with tens of billions of dollars in preferential interest rates from Chinese banks, and the necessary procedures for factory construction Pass at the fastest speed, which is why it can create what is called “Tesla Speed”.
Tesla has the confidence to reduce the official domestic sales price of the Model 3 precisely because local suppliers are progressing smoothly. From another perspective, these suppliers also have the opportunity to improve their capabilities, get more orders, and be welcomed in the capital market. The positive impact of these industries will eventually help the development of other electric vehicle companies. Again, the biggest issue for local electric vehicles is how to compete for the market from fuel vehicles. The reduction of production costs must be a good thing.
At present, Tesla’s main market in China is still first-tier and new first-tier cities. Consumption of electric vehicles is also mainly concentrated in these big cities. The average selling price of new cars in many of these cities has already exceeded 200,000 yuan, and some cities have even exceeded 300,000 yuan. In Shanghai, Mercedes-Benz and BMW’s market share in 2019 is close to 10%, and the average price of their new cars is more than 400,000 yuan. For the mainstream price segment of 200,000 to 400,000 yuan, electric vehicle products are relatively absent. The reason why the domestic Model 3 has attracted attention recently is precisely that it has seized this space. Of course, other electric car companies can also enter this market.
Ten years ago, when the Chinese auto market began to erupt, the favorite thing for auto companies was to follow. After leading models appeared in a segment, other companies launched similar models as soon as possible, although the impact and sales may not Can surpass the first place, but also gain increments. This may be optimal. China’s electric vehicle market has always had a “pre-publication” outbreak, and it has been policy that has caused it to erupt before. However, as subsidies fell in 2019, it was found that the main driving force was from consumers themselves.
If there is an electric vehicle that consumers are willing to buy aside from external factors such as subsidies, it will only be a good thing for the market. If you must say it, the domestic Tesla entering the market will definitely be a fire for the expected outbreak of the electric vehicle market, not a basin of cold water. This is business.