Tesla announced on January 4 that the Model 3 made in China will be delivered on a scale on January 7. The price of the Model 3 made in China has previously lowered again, starting at 66,51000 PKR per vehicle after deducting subsidies, falling below the 66,73000 PKR mark. According to data released by Tesla, in 2019, approximately 367,500 vehicles were delivered in total, an increase of 50% year-on-year, and the annual target of 360,000 vehicles was achieved.
Insiders pointed out that Tesla’s localized production will increase the space in the domestic market. According to Tesla’s production of 300,000 vehicles and a value of 66,73000 PKR in 2021, it is estimated that battery, materials, high-voltage DC relays, thermal management systems and other links are expected to bring more than 80 billion rupees of market space. The three types of investment opportunities in the supply chain deserve attention, including companies with high technical barriers, leading products, and strong supporting certainties; companies with obvious elasticity of revenue and profit marginal effects; companies that have already supplied or potential parts and components.
Tesla shares hit a record high
On January 3rd, Eastern Time, Tesla released vehicle production and delivery data for the fourth quarter of 2019. Among them, in the fourth quarter, 104,900 electric vehicles were produced, and about 112,000 electric vehicles were delivered. For the full year of 2019, Tesla delivered about 367,500 vehicles, an increase of 50% year-on-year.
From the perspective of models, in the fourth quarter of 2019, Model 3 delivered 92,550 vehicles, delivering 301,000 vehicles throughout the year, an increase of 53% year-on-year; ModelS / X production and delivery of 19,450 vehicles, delivering 67,000 vehicles throughout the year, a year-on-year decrease of 33%. Tesla said that less than 12 months have passed since the groundbreaking of the Shanghai Super Factory. The factory has produced nearly 1,000 vehicles for sale and reached a production capacity of more than 3,000 vehicles per week.
Analysts pointed out that Tesla’s delivery volume is receiving attention, and this number is a barometer of the company’s performance.
Driven by sales growth, Tesla’s stock price hit a record high. On January 3, it once rose to 454 USD / share during the session and closed at 443.01 USD / share as of the close. Over the past month, Tesla shares have risen 30%, with a total market value of $ 79.85 billion, surpassing traditional auto giants such as Hyundai, Ford, General Motors, BMW and Daimler.
Local production brings room for price reduction
On January 7, the Tesla Model 3 made in China will officially start large-scale delivery. On December 30, 2019, the Model 3 produced by Tesla’s Shanghai Super Factory in China has completed small-scale delivery to internal employees. Tesla’s expected delivery time in the first quarter of 2020 has been significantly advanced.
At the same time, Tesla’s domestic price cuts exceeded market expectations. Tesla announced on January 3 that it will adjust the sales policy of the entire Model 3 in China. The domestically produced Basic Model 3 will be reduced from 791,4000 PKR per vehicle to 7,203000 PKR per vehicle.
On December 6, 2019, the Ministry of Industry and Information Technology announced the eleventh batch of “Recommended Models for the Promotion and Application of New Energy Vehicles” in 2019, with a total of 146 newly released models on the list, including Model 3 models produced by Tesla’s Shanghai Super Factory. Based on the current selling price, each domestic Tesla Model 3 will receive a subsidy of 500,000 PKR.
On December 27, 2019, the Ministry of Industry and Information Technology announced the latest batch of “New Energy Vehicle Model Catalogs Exempted from Vehicle Purchase Tax”, and the domestic Tesla Model3 was among them. This means that the domestic Tesla Model 3 can further obtain the exemption from vehicle purchase tax based on the above subsidies.
After enjoying the purchase tax exemption policy and subsidies for new energy vehicles, the domestic model 3 basic model subsidized price was 66,51000 PKR/car, falling below the 66,73000 PKR mark.
A research report released by Industrial Securities shows that the gross profit margin of the Model 3 made in China is significantly higher than that of the Model 3 produced in the United States; the production cost of the Model 3 made in China is 20% -28% lower than that of the US version. Industrial Securities estimates that domestic Model 3 has a 27% -34% price reduction space. This means that with the gradual localization of Tesla’s supply chain, prices may be further reduced in the future.
At a time when subsidies for the new energy vehicle market have declined, sales have fallen, and new car-making forces have encountered financial difficulties, the Tesla Model 3 made in China has achieved scale delivery, which is considered to be beneficial to the entire industrial chain and to drive a new wave of domestic electric vehicle buying. China Merchants Securities believes that Tesla has a large investment and deep accumulation in the new car building forces, and has a clear advantage in terms of supply chain integration capabilities. In recent years, Tesla’s strong performance has greatly stimulated the electric vehicle investment of traditional car companies. If the Tesla China plant is successfully put into operation, it may further stimulate overseas auto companies to increase their investment in electrification.
Increased domestic supplier participation
What can Tesla build in China for the domestic auto industry? Guotai Junan analysts said that the biggest change is the localization of the supply chain. This will bring a clear increase to domestic supply chain-related companies. “Unlike the mobile phone industry chain, the length and depth of the automotive industry chain far exceed that of smartphones, and the list of suppliers that are expected to continue to benefit will be longer.
Judging from the current situation, Tesla’s core first-tier suppliers mostly come from Europe, America, Japan and other places, and domestic companies mostly serve as second-tier suppliers. For example, at present Tesla’s lithium battery PACK manufacturer is Panasonic Japan, the cathode material and separator supplier is Sumitomo Chemical Japan, the anode material supplier is Hitachi Chemical Japan, and the electrolyte is produced by Mitsubishi Chemical Japan.
But this situation may change. According to media reports, LG Chem is expected to supply Tesla’s Shanghai plant with power batteries. This means that Tesla’s power battery supplier may be solely supplied by Panasonic or transformed into a joint supply by Panasonic and LG Chem. The domestic supply chain supporting LG Chem is expected to become the largest domestic supply chain for Tesla.
Specifically, Tesla’s supply chain includes powertrain systems, electric drive systems, charging, chassis, body, central control systems, interior and exterior trims, etc., involving more than 100 direct and indirect suppliers.
The aforementioned Guotai Junan analyst believes that as Tesla’s electric vehicle production capacity in China gradually rolls out, Tesla’s Model 3 batteries, motors, and parts casings all have a strong demand for raw materials in the industrial chain. “Upstream raw materials such as cobalt, manganese, nickel, lithium, graphite, and connectors in the midstream and downstream will generate greater demand kinetic energy. Chinese charging equipment manufacturers, operators, integrators, etc. are expected to further increase participation, and the entire power battery industry chain will Benefit. ”
Shenwan Hongyuan Securities said that Tesla’s localized production will create huge domestic market space. According to calculations, assuming that Tesla will produce 300,000 vehicles in 2021 and the value of bicycles will be 66,73000 PKR. It is expected that battery, materials, high-voltage DC relays, and thermal management systems will bring more than 80 billion rupees market space.
CITIC Securities believes that Tesla’s localized production can reduce costs in terms of plant buildings, employee compensation, and the power battery industry chain. Falling vehicle prices will drive demand to rise significantly. It is estimated that the domestic Model 3 sales will reach 120,000 to 150,000 units throughout the year. It is recommended to keep an eye on the opportunities offered by Tesla’s supply chain. Divided into three categories according to supporting supply, including high technical barriers, leading products, and strong supporting certainty, such as Sanhua Intelligent Control, Ningde Times, and Hongfa Co .; supply Tesla makes the revenue and profit marginal effect elasticity obvious, Such as Top Group, etc .; component companies that have already supplied or are likely to supply, such as Xusheng, Huayu Automobile, Ningbo Huaxiang, etc.