Image Source: Vision China
After news of Tesla's registration of a wholly-owned subsidiary in Shanghai, the localization of the Tesla model has spread wildly. There have even been many reports that Tesla's factory in Shanghai has started construction.
It is not difficult for Chinese owners to understand this news. Domestic Tesla may maintain a similar price to the US market, especially in the United States, which sells Model 3 with a minimum price of US$35,000. Ten thousand yuan, taking into account the costs of various retrofits, purchase taxes, and insurance, and Tesla, which has reached 300,000, is a possibility.
However, for Tesla, an internally and diplomatically troubled one, there are still seven thresholds to face in order to achieve localized production and sales in the Chinese market.
I. Shortage of funds
Credit rating agency Moody's rated Tesla Credit as "rubbish" this year, and JPMorgan Chase has also given Tesla's stocks a "reduce" proposal, as well as one after another, "Tesla Bankruptcy." On the core incentive is the lack of money.
In Tesla's first-quarter earnings report, total revenue was 3.409 billion U.S. dollars, while the loss also reached 785 million U.S. dollars. Although the financial report disclosed that Tesla also has $2.7 billion in cash flow, there have been five quarters of negative cash flow.Bloomberg even believes that Tesla will use up capital before the end of the year unless there is a significant increase in vehicle production or new capital injections.
In early April of this year, the Development and Reform Commission announced that the limit on the foreign capital ratio of new energy vehicles was about to be cancelled. Tesla seems to have chosen to go ahead and set up a Shanghai-based free trade zone in the form of a wholly-owned subsidiary. According to public information, Tesla’s first super factory has a total investment of US$5 billion. New factories in China also require such large-scale capital. After all, they have invested in factories that have been broken ground, such as Xiaopeng Automobile and Qidian Auto. The amount is also between 10 billion RMB and 15 billion RMB.
The registered capital of Tesla (Shanghai) Co., Ltd. is RMB 100 million. Real capital is still unknown. So where does tens of billions of funds come from? Either Tesla tempts the prospects of the Chinese factory and the Chinese market to attract new investors, or allow independent operations of subsidiary companies in China, such as Tesla’s headquarters to share technology, and then share a share for local Chinese investors. opportunity. While Weilai, Weimar, etc. have not yet sold a car, China's Internet giants have started to give money, and the target valuation of Weilai has reached US$36 billion.
Tesla has obvious advantages in terms of brand, channel and technological capabilities compared with China’s new vehicle builders. At the beginning of March last year, some media exposed Tencent’s acquisition of Tesla’s 8.167 million shares in the open market through its Yellow River Investment for US$1.778 billion, accounting for 5% of the shares. This is a positive signal, at least refracting Chinese investors' appreciation of the attitude of Tesla.
Second, lack of talent
There is an old saying in China that “the wall is down,” and when Tesla is facing a dark time, the executive team is also constantly turbulent. In 2017, a total of 16 executives resigned and the situation continued after 2018. Chip leader Jim · Keller, sales director Jon Mcneil, vice president of finance Susan Repo, and chief financial officer Eric Branderiz have left the company. . Waiting for Tesla's is not "a drunkard," but "declined".
The Chinese market does not seem to lack talents. Some people have even calculated an account for Tesla. The average hourly wage of American automobile assembly workers is about 100 yuan, while the equivalent hourly wage in Shanghai is less than 35 yuan. It seems that building a factory in China It can save a large part of labor costs. But Tesla’s real status quo is that Tesla’s employees in the Chinese market are concentrated on the sales side, and a series of talent systems such as R&D, management, marketing, and legal affairs needs to be from 0 to 1.
Returning to the environment of China’s new energy market, there are two major forces in the field of electric vehicles. One is a traditional main engine plant that has been transformed into new energy, and the other is a new number of dozens of new vehicle builders. It is an indisputable fact. Perhaps Tesla has the opportunity to join the ranks of robbers of talent, and he does not hesitate to earnestly rake in corners to traditional OEMs. However, the flow and cultivation of talent still needs time as a cost.
Unfortunately, most of Tesla’s runaway executives went to Tesla’s direct or potential competitors such as Google and Intel. In the Chinese market, Tesla needs to face the same problems, especially Wei Lai, Xiao Peng, Wei Ma and other competitors.
Third, supply chain issues
The supply chain involved in Tesla electric vehicles can be divided into nine parts: powertrain system, electric drive system, charging, chassis, body, other components, central control system, interior and exterior, and direct or indirect suppliers. More than 130 homes, including more than half of Chinese companies.
In the three core systems of powertrain, electric drive, and charging, Chinese companies also accounted for more than half of them, but they focused on dashboards, bumpers, and interiors. The core technology suppliers still came from Japan and the United States. EU. However, Sony, Bosch, etc. also have corresponding factories in China. The establishment of factories in China can actually help Tesla save on transportation and tariffs, and help Tesla to improve its competitiveness across Asia.
Model 3's "difficulty" shows that Tesla may not be a good company to manage the supply chain. GM, Nissan, and Volkswagen use a modular approach, relying mainly on a limited number of Tier 1 suppliers, and this has led to homogenization of the automotive market. Tesla disrupted the traditional supply chain model, trying to learn Ford's vertical integration of the supply chain and over-automating the production process, but the cost of disruptive innovation is also obvious.
Tesla can copy the already-experienced experience into the Chinese market, but it also faces new problems. For example, Tesla's only electric motor supplier, Futian Electric, was rejected a few years ago in cooperation with Zhejiang Taizhou's Xinmei Motor. There are not many options left for Tesla, or import methods, or looking for alternative suppliers in China, still need Tesla to choose.
4, qualification issues
According to business registration data, the business scope of Tesla (Shanghai) Co., Ltd. does not include vehicle manufacturing or battery manufacturing, but focuses on technology research and development and sales. Although Musk has hinted at many occasions on plans to build factories in China, it still faces qualification problems.
Since May 2017, the gate for the approval of new energy vehicle production qualifications has been closed for more than a year. Of the 15 licenses issued, only six companies have vehicles on sale. Such as Wei Lai, Singularity, etc. have been stuck in the qualification link, whether the policy will be green light to Tesla, is still an unknown number.
Of course, it is not without good factors. The retreat of subsidy policies for new energy vehicles has changed the direction of market competition. The previous subsidy for new energy vehicles was To B. The vehicle that was originally priced at 300,000 vehicles may only need 150,000 after subsidy, as well as disguised benefits such as licensing. This led to the emergence of a large number of domestic A0 and A00 grade products; after 2018, the emphasis of subsidies will shift from purchase to use, becoming To C type subsidies, such as new energy for parking, toll, and charging. Owners enjoy benefits.
Well, car companies like Tesla had the need to exist. It was like putting a carp in a fish pond, which intensified the competition in the domestic new energy car market and accelerated the progress of iterative progress.
5, insufficient capacity
In 2017, the Chinese market contributed to Tesla's revenue of 17%. At that time, the volume of China's new energy vehicle market already accounted for 40% of the world's total. After the domestic Tesla is expected to reduce its price by one-third, which has brought unprecedented competitiveness to Tesla's series of models, coupled with a huge market gap, Tesla has no reason not to throw an olive branch to China.
However, Tesla’s pressure on production was precisely at the end of 2017. In addition to the Nevada super factory under construction at the end of 2017, Tesla had only completed a 370-acre super factory in Fremont. It is an assembly plant that General Motors shut down in 1982. According to the latest news, the output of the Model 3 assembly line is 500 vehicles per day, and the goal of producing 5,000 vehicles per week seems no longer far away. With the order of more than 400,000 units of Model 3, Tesla will be able to deliver on schedule and still be patient with the patience of consumers and investors.
Tesla’s production capacity at the Chinese factory remains in doubt. If the real thing is as predicted by Musk, the super factory will be completed and put into production within one year. The production capacity may not be more optimistic than Fremont. Can it complete the construction of the supply chain within the same time and whether it can complete the speed increase of the automated production line? It is also worth discussing.
However, compared to the United States, China has a more complete auto supporting industry, and the external factors that restrict Tesla's production capacity are much less. What remains is Tesla's own problems.
6, the disadvantage of time
After the implementation of the double-integration policy, the new energy joint venture car prices once again become the trend, Great Wall + BMW, Zotye + Ford, JAC + Volkswagen, the future of this list is bound to grow longer. Compared to the wholly-owned Tesla, these car companies undoubtedly have a lower policy threshold, have a more mature supply chain, better production conditions, and mainly to new energy models.
At the same time, Chinese OEMs such as Geely, BYD, and Zhongtai have also begun to change their understanding of new energy vehicles, postponed or cancelled A00-level new energy models, and switched to electric SUVs more suitable for the mass market; Xiaopeng, Weilai, etc. New car drivers are targeting high-end positioning ……
Compared to these competitors, Tesla's biggest short board is not a brand, and it may not be a technology but a time.
Tesla sent only exploratory “first march” when competitors were already in production and occupied the market. The disadvantage of time was not good news for Tesla after all. Great Wall BMW is about to produce a pure electric vehicle with MINI, and Jianghuai Volkswagen has launched its first product, the E20X. Together with China, it has become the world's largest new energy vehicle market. Volkswagen, Toyota and other brands of new energy vehicles will also be invested in China. Tesla is not Then there is the lone player who lacks a competitor.
7, service issues
From the perspective of energy allocation, the United States is a country that typically uses oil as its energy source. This can also explain why the United States has never lacked a large-displacement vehicle that is not less than 3.6L, and why the US government's attitude toward new energy vehicles is so cold. China, Japan, and Europe are among the most powerful supporters of new energy.
To some extent, the market environment in the United States determines Tesla’s business model. For example, the direct sales model and order production can effectively reduce product inventory and capital occupation. It is not unrelated to Tesla’s early geek users. Even in the Chinese market, the earliest Tesla owners are concentrated in the technology circle.
As of now, Tesla has more than 30 experience stores in the Chinese market, and more than half is concentrated in first-tier cities such as Guangzhou, Shenzhen, Shenzhen, Shenzhen and Shenzhen. The penetration in third-tier cities is almost zero. According to the requirements of the “Implementation Measures for Automobile Brand Sales Management”, the distance between the sales of automobile brands and the supply of accessories and after-sales service outlets must not exceed 150 km. The lack of Tesla's service model has already determined Tesla's sales scope.
In addition, there are a series of problems such as charging piles, maintenance and after-sales waiting for Tesla's solution.
For Tesla, entering China is a step that must be taken, not only for the Chinese market, but also for Tesla's own better survival. Just building a factory was not a simple matter. Tesla’s long march in the Chinese market was only just getting written approvals. There is still a long way to go in the future.