Shanghai-built Tesla may reshape Chinese NEV market, says report
THE Shanghai-built Tesla Model 3, which starts at 355,800 yuan ($50,600) and is set to be available for large-scale delivery in the first quarter of next year, is expected to reshape China’s new energy car market, a report by Beijing Daily said on Monday.
“China is by far the largest market for mid-sized premium sedans,” Tesla said in its quarterly financial statement recently. “With Model 3 priced on par with gasoline powered mid-sized sedans, we believe China could become the biggest market for Model 3.”
Tesla’s third-quarter earnings report said it produced 96,155 electric vehicles during the period, and delivered a record-high 97,000 units.
On the other hand, China’s new energy vehicles (NEV ) sector has seen sales plunge for four consecutive months since the government cut subsidies in June, data from the China Association of Automobile Manufacturers shows.
Total production and sales of new energy cars in October reached 95,000 units and 75,000 units respectively, down 35.4 per cent and 45.6 per cent year-on-year, the data showed.
In the past four months, sales of new energy vehicles remained between 70,000 and 80,000 units, meaning extra sales have to surpass 300,000 units by the end of this year if the NEV market wants to meet last year’s overall sales record, Beijing Daily reported.
The picture also looks gloomy for domestic NEV companies. Last month, Chinese car maker BYD sold 12,600 new energy vehicles, down 55 per cent year-on-year, of which pure electric passenger car sales fell 41.5 per cent to 7,588 units. For BJEV – the electric car subsidiary of the Chinese manufacturer BAIC – sales last month registered at 8,601 units, a 69.2 per cent year-on-year plummet.
Even so, Tesla, which relied on imports to China before its Shanghai plant, was not affected much by the subsidy cuts, the newspaper reported.
Its new Shanghai Gigafactor y was completed in just 10 months, and is now ready for production, which can help reduce costs by approx imately 65 per cent compared with the Model 3 production line in the US. It can a lso contribute a higher gross margin for the Model 3, Tesla CEO Elon Musk said.
A higher-than-expected pricing of the Shanghai-built Model 3 will also win Tesla initiative in market competition after China’s NEV subsidy policies are reshaped next year, analysts said in the report.
China’s counterparts may face adjustment in their prices after Tesla produces its models in Shanghai. Tesla has become an object for reference, not only in pricing, but also in the level of intelligence and convenience for the in-vehicle system, a practitioner at the new energy vehicle industry said.
However, due to capacity constraints and the mid-to-high end market position, the locally-produced Tesla will not have a strong impact on the industry, and China’s new energy car companies still have enough space for development and competition.
“Short-endurance economy cars are a huge market. In the new round of competition, China’s NEV producers need to find the right market position and their targeted consumers, and pay attention to brand development and establish public praise,” said Su Hui, an official with the China Automobile Dealers Association, in t he report.