Model Y sales are booming. Why can Tesla make the Chinese scramble to pay?
“Six cars have been sold today, and my voice is so hoarse.” At 6 pm on October 24, a reporter from Caijing came to Shanghai Changning Raffles Tesla Experience Center, the clerk said. That day coincided with the second day when the results of the Shanghai October fuel license plate auction were announced, and the bid winning rate in this auction was only 4.9%. On Sunday, Tesla’s stores are booming.
This is a microcosm of Tesla’s steadily increasing sales in China. In September of this year, Tesla delivered 52,153 domestic new cars, and domestic monthly sales increased by more than 300% year-on-year. Since the beginning of this year, Tesla’s sales in China have exceeded 200,000 vehicles.
The rapid sales growth is inseparable from Tesla’s cost reduction measures. In July of this year, Tesla announced the launch of a domestically produced Model Y standard battery life version. The subsidized price was only RMB 276,000, which was 71,900 yuan lower than the long battery life version currently on sale.
Public information shows that the number of orders for the “Beggar Edition” Model Y exceeded 10,000 on the day it was launched, and it took a day to complete the goal that other models could only reach in a few months. In September of this year, Model Y sold 33,033 new vehicles, becoming the champion of SUV sales in all categories including new energy vehicles and fuel vehicles.
Cui Dongshu, secretary-general of the National Passenger Vehicle Information Joint Council, analyzed to a reporter from Caijing that Beijing, Shanghai, Shenzhen, Guangzhou, Hangzhou, etc., cities with limited travel policies and strong economic strength are the largest markets in the Tesla market. .
“The sales of new energy vehicles this year are very good. This shows that the nearly 20 years of innovation preparations for new energy vehicles, from innovation to industrialization, to solving the use environment, etc., the series of processes have been effective, and it is time for rapid growth. “Fu Bingfeng, executive vice president and secretary-general of China Association of Automobile Manufacturers, told the Caijing reporter.
What should not be overlooked is that as the most topical electric vehicle companies and managers, Tesla and Musk have their own traffic IP. Their commercial actions, like the flapping wings of an Amazon butterfly, will directly stir up the global electric vehicle competition. As a game-theoretic machine with “Made Feelings”, the players at the table are all trying to figure out his mind, staring at what he wants to play next card…
Price cuts, pulling peers into price “meshed”
“The price of 270,000 yuan cannot be rejected.” Mr. Yang, a Tesla owner in Foshan, Guangdong, told a reporter from Caijing.
Mr. Yang is a typical family-demand user. In order to give his children a more comfortable space, he struggled for a few months. After comparing BBA and Lexus, he finally ordered a Tesla Model that was “saving, worry-free, and extremely spacious”. The Y standard battery life version, the price of more than 100,000 yuan less than BBA (Mercedes-Benz, BMW, Audi) is the decisive factor that impresses him. In terms of brand and performance, he prefers BMW X3 and Lexus RX, but both of them are priced at more than 400,000 yuan.
Other car owners told the Caijing reporter that Model Y does not require maintenance, does not cost gas, and there is basically no expense behind it, which can save a lot of money in a year.
Perhaps it was the sweetness of the Model 3 price cut last year. In July, Tesla launched the Model Y with a standard battery life using lithium iron phosphate batteries, which immediately attracted a lot of users who are looking for cost performance.
A salesperson at the Guangzhou Tianhe Guangyue Tiandi Experience Store told Caijing that the most customers buy Model Y, because the standard battery life in the city is sufficient, and the lithium iron phosphate battery is sufficient to cope with most temperature environments in Guangdong. “Although ternary lithium is resistant to low temperatures, we would suggest not to charge it fully. Instead, lithium iron phosphate can be fully charged, so the standard renewal version sells best.”
“Model Y’s success is mainly due to its price reduction, which has led to a substantial increase in cost performance, so the market recognition has continued to increase. At the same time, as a technology product, it has continuously strengthened its own functions, so everyone recognizes its products.” Cui Dongshu told ” Caijing reporter.
A Model Y owner in Chengdu said that at first she was interested in space, but after using it, she fell in love with Model Y’s camping mode. “You can driveair conditioner, Ventilation, after the discharge, the weather is cold, you can also open the bonfire mode. When the air conditioner is turned on for one night, it will consume 80km-90km of electricity. I don’t think it consumes too much electricity. “
“There are not many things that are cheap and not out of style, Tesla counts as one.” Some car owners expressed their reasons for buying a car to a reporter from Caijing.
Sales have soared, and all discounts on car purchases have been cancelled. Previously, if a new car owner buys a new car through the recommendation of an old car owner, both parties will receive a free reward of 1500 km supercharge that is valid for 6 months. Since September 18, the car owner’s referral reward will be cancelled. Form of concessions.
The reporter of Caijing learned that Tesla employees can buy cars at the same price as ordinary consumers, but they can activate the FSD (Full Self-Driving, “Full Self-Driving”) function worth 64,000 yuan for free.
Public information shows that in the third quarter of this year, Tesla’s revenue in the Chinese market reached US$3.113 billion, a year-on-year increase of 78.5%. In the first three quarters of this year, Tesla’s revenue in the Chinese market was US$9.015 billion, which exceeded Tesla’s annual revenue of US$6.662 billion last year.
At Tesla’s 2021 shareholders meeting on October 8, CEO Musk praised the performance of the Shanghai factory: “The Shanghai Super Factory has amazing vehicle quality and operational efficiency, and it has done a great job!”
According to media reports, Tesla has fully repaid the loan borrowed for the construction of the Shanghai Gigafactory at the time, totaling US$1.4 billion in just 16 months. The original loan repayment period was 5 years (60 months).
Lowering the price does not lower the quality. Tesla trades price for quantity. Musk is laughing and his peers are crying.
With the gradual popularization of the consumption concept of new energy vehicles, coupled with the spring breeze of industrial support policies. From the perspective of new energy vehicle companies, the best strategy is to use fuel vehicles as an anchor, stick to the original price, and earn corresponding profits. However, this offensive and defensive alliance has been broken by Tesla, and out of personal rational choice, Tesla took the lead in lowering prices.
The end result is that all new energy vehicles are forced to enter the price roll in order to gain the favor of consumers. There will be more car companies cutting prices, with higher frequency and greater price reductions. Even though, they may understand that trading price for quantity may not bring high profits, but they all hope to compete with endurance and kill their opponents so that the winner takes all.
By 2030, Musk has set a sales target for Tesla to sell 20 million vehicles a year, and expressed confidence that it can maintain a growth rate of at least 50% of the delivery volume-and for the entire year of 2020, Tesla’s sales have just Break through 500,000 vehicles.
Zheng Yun, Roland Berger’s global senior partner and head of the Automotive Industry Center, analyzed to a reporter from Caijing that the world’s first high-tech electric car concept was proposed by Tesla. Its brand premium is very high and it is very attractive. Strength, established a unique market position. In addition, Tesla’s leading autopilot function is also eye-catching.
Behind Catfish Tesla, other players are still keen on free-riding
In September, Model Y has replaced the Haval H6, the top SUV sold throughout the year.
As of August this year, the Haval H6, which has been on the market for 10 years, has become the No. 1 SUV sales in China for 99 months. In September, it was not the Changan CS75, which has always targeted it, nor the Honda CR-V, the originator of the SUV. , But the pure electric vehicle that just went on the market at the beginning of this year-Tesla Model Y.
You know, these are two models with completely different positioning, and there is no direct competition. Haval H6 starts at 98,900 yuan, which is a representative of its own brand and focuses on cost performance; Model Y starts at 276,000 yuan, with a strong sense of technology. , The brand is outstanding.
This is the terrible thing about Tesla as a “price butcher”. Tesla’s “price reduction-sales increase-cost reduction-price reduction again” model is causing a chain reaction in the industry. Its strike range extends from BBA to its own brands, and has an impact on every car company.
However, it should be pointed out that the sales volume in a single month is unique. According to Tesla’s plan, the cars produced in the first half of the quarter will be mainly used for export, and the second half will be for the domestic market. The “boom orders” in September are closely related to Tesla’s delivery pace, and even the backlog of orders in the first few months. The concentrated expression.
“Model Y’s surpassing of Haval H6 is only a phased phenomenon, but Tesla’s sales are indeed getting stronger and stronger, and it will become stronger and stronger. This is everyone’s common recognition.” Cui Dongshu told the reporter of Caijing.
According to statistics from the China Association of Automobile Manufacturers, from January to September this year, the sales of new energy vehicles reached 2.157 million, an increase of 185.3% compared with the same period last year. Among them, passenger car sales reached 2.045 million, a year-on-year increase of 199%.
Tesla is not the only one that has seen rapid sales growth. In September, sales of some models of BYD, Wuling, Changan, Xiaopeng, Ideal and other brands all rose more than 100% year-on-year. BYD’s Qin PLUS DM-i and Song DM both rank closely behind Tesla Model Y and 3, with monthly sales exceeding 10,000.
Among the new car manufacturers, Xiaopeng P7 and Ideal ONE achieved sales of 7,512 and 7,094 respectively, an increase of 192% and 102.5% year-on-year. Not to mention that Wuling Hongguang MINI, which has been selling well, has monthly sales of more than 35,000 units, a year-on-year increase of 142.6%.
Although the sales of new energy vehicles are catching up with me, they do not want to compete in the stock market. The fuel vehicle market is the big cake coveted by new energy vehicle companies. In this sense, the relationship between Tesla and other new energy brands is a positive-sum game, and new energy and fuel vehicles are closer to a zero-sum game.
Xu Changming, deputy director of the National Information Center and senior economist, pointed out that since the increase in private new energy vehicles accounted for 54.3% of the total increase in new energy vehicles in 2019, the purchase of private new energy vehicles has increased rapidly. The data he enumerated shows that this proportion will increase to 71.5% in 2020 and 77% in the first seven months of 2021.
If cars are divided into two camps of new energy and traditional energy according to the energy category, then Tesla is naturally the pioneer of new energy vehicles. For many new energy vehicle brands around the world, it is a high-quality choice to take a free-rider approach and cross the river by touching Tesla. OTA upgrades, high-end autopilots, commercial direct operation-Lei, Tesla, you are here, your lesson is my experience.
Li Bin, CEO of Weilai Automobile, once told a reporter from Caijing: “There is not much competition between Weilai and Tesla’s products. Our competitor is BBA. We need to turn BBA fuel vehicle users in the same price range into our own. Users.” Weimar CEO Shen Hui also believes that Weimar’s market targets are users of GM, Volkswagen, and Toyota. It makes sense to convert users of fuel vehicles into users of smart electric vehicles.
Before this, there was another low-level free-riding phenomenon. In the past, when countries implemented radical new energy vehicle industry policies, both Tesla and A00-class electric vehicles that looked like “old head music” were able to receive financial subsidies. At that time, instead of investing in technology research and development, it would be better to use the lowest production cost and lower technology input to maximize sales and obtain sufficient government support policies and industrial subsidies. In the past few years, hundreds of new energy vehicle brands in China have been riding Tesla and the development of the industry.
Fortunately, after “domesticated”, Tesla, which no longer faces high tariffs, has truly become an effective catfish. Let ambitious domestic new energy automobile companies understand that only by deploying their core competitiveness can they go further and earn greater profits in a broader future market.
Zhang Hong, secretary general of the New Energy Vehicles Branch of the China Automobile Dealers Association, believes that whether new energy vehicles are occupying a large number of fuel vehicles market still needs to be observed, because the decline in sales of fuel vehicles is caused by insufficient global chip supply. “In a sense, the month-to-month growth of new energy vehicles is just ‘taking advantage of the emptiness’, not replacing fuel vehicles in rigid demand.”
Make yourself an opponent
Model Y, whose price has dropped, has also squeezed the sales of Tesla’s own Model 3.
In September, the sales of Model 3 were 19,120, a year-on-year increase of 68.8%. The sales of new energy vehicles that doubled year-on-year showed a slight lag. This also reflects from one aspect that the potential of SUVs in the new energy vehicle market is still not inferior to cars.
To the surprise of the industry, the best-selling of Model Y happened at a time when new domestic car manufacturers entered the car market.
Before 2020, domestic new forces generally focused on SUV models. The Weimar EX5, Xiaopeng G3, Ideal ONE, and Weilai ES8 have achieved good sales in different price ranges. At that time, Model Y was not yet on the market, and Tesla took the lead with its Model 3 product.
However, since Xiaopeng P7 went on the market last year, Weilai, Jikrypton, Zhiji, and Weimar have all played the “car brand.”
A senior executive of a new power car company told the Caijing reporter that the mainstream market was cars more than a decade ago, but after Honda CR-V, Volkswagen Tiguan and other models were launched, SUV sales have soared. After entering the era of smart electric vehicles, SUVs have become boring. The mainstream market likes more personalized car products.
Unexpectedly, the rise of Model Y at this time happened to stagger the “car” fever of new forces.
Compared with Tesla’s previous explosive Model 3, Model Y has obvious advantages. The same technology experience and appearance, higher battery life and interior space, the price is only 40,000 yuan, and there are many car owners who choose Model Y. .
A salesperson at the Beijing Chaoyang Qiaofu Fangcaodian Store told the Caijing reporter that Model Y is already the best-selling model in the store. On average, out of ten car buyers, seven chose Model Y and three chose Model 3. .
At present, in the words of Tesla’s vice president of technology Drew Baglino: “Model 3 is currently the best-selling luxury car on the global market.” But Musk said that next year Model Y sales are expected to be Surpass Model 3 and become the best-selling car in the world.
“Giving birth to more children is good for fighting” “There is always a product strategy for you”, which is the product strategy of many car brands, but for Tesla, the Model Y of 276,000 yuan and the Model 3 of 236,000 yuan are fighting each other. The trend.
According to statistics from the EV Sales Blog, an electric vehicle sales tracking agency, Model 3 will achieve 365,000 global sales in 2020, with a market share of 12% in the new energy market and 72% of Tesla’s total sales. According to the current trend, this figure may be difficult to maintain for another year.
“Model Y squeezes the Model 3 market. This is for sure.” Cui Dongshu predicts to the Caijing reporter that Model 3 will continue to cut prices because the current profit is extremely large, with a gross profit margin of 30%, far exceeding the average level of the automotive industry. There is room for price reduction.
If Model 3 continues to reduce its price from 236,000 yuan, it means that it will continue to squeeze the market space of existing independent brands (100,000-150,000 yuan) and mainstream joint ventures (150,000-200,000 yuan).
As the investment bank Morgan Stanley said, Tesla is a company whose goal is to “continuously reduce prices, expand market segments, and improve product accessibility to consumers.”
Competing for production capacity for customers
Model Y won the championship in sales, on the one hand, because of the high enthusiasm of consumers, on the other hand, because Tesla is relatively less affected by the shortage of chips and upstream raw materials, which guarantees delivery.
Since last year, the global chip production capacity has spread to various industries, and the automotive industry is no exception. In addition to the most obvious epidemic factor, overseas natural disasters and economic and trade environments have impacted the supply chain of automotive chips. In this context, most fuel vehicle companies are constrained by production capacity, and even some companies have announced the suspension of production one after another.
According to data from the research institute AutoForecast Solutions, as of September 26 this year, the lack of core has caused a cumulative reduction of 8.934 million vehicles in the global automotive market, and a cumulative reduction of 1.814 million vehicles in the Chinese market, accounting for 20.3% of the total.
Therefore, finding the “core” has become the most important problem for the automotive industry this year, and Tesla has its own “answering ideas” in this regard.
“Many car companies, such as large joint ventures, incorporate China’s procurement system into the global procurement system, and generally adopt stable long-term procurement agreements. Therefore, in the case of chip shortages, they can only lie flat and stop production. And some car companies Strong flexibility, doing everything possible to find resources through various methods to ensure production, the difference is reflected in this process.” Li Shaohua, deputy secretary general of the China Automobile Association, told the reporter of Caijing.
Tesla CFO Zach Kirkhorn (Zach Kirkhorn) said in the third-quarter earnings call that the current impact is mainly nickel and aluminum, that is, nickel and aluminum used for batteries and non-electric cores. Some raw materials are directly contracted, so there is no buffer period for the impact. Of course, there are also long-term supply commitments and contracts, and some projects that share the cost of price index fluctuations. The changes in the market have been conveyed to Tesla’s product production. Although there is no major impact at present, it is by no means insignificant.
In order to solve the short-term supply problem, Tesla has a lot of tricks. Tao Lin, Tesla’s global vice president, said that its core chip parts are all independently developed and processed by outsourcing, reducing external dependence. In addition, some chip functions are replaced by software to cope with the current shortage of chips. Drew Baglino added that the diversification of raw materials is also being considered, and it is not necessary to use nickel or cobalt to produce batteries.
A Morgan Stanley report pointed out that Tesla can ensure chip supply because of its strong vertical integration capabilities, self-developed chip capabilities, strong negotiation capabilities, and relatively small scale.
The report analyzes that Tesla may be the world’s most vertically integrated OEM, so Tesla can understand the supply chain earlier and use multiple suppliers to ensure supply. At the time when production was discontinued early this year, Tesla had already begun to develop alternative MCU chips and firmware, thus solving the problem of MCU chip shortage.
It can be seen that the game between Tesla and other car brands is not only about competing for consumers, but also about competing for limited supply of chips and raw materials to ensure their own production capacity, and competition in the supply chain may have a more far-reaching impact.
According to data from the US investment bank Wedbush, Tesla’s current demand is about 10% higher than supply, which is the main reason for restricting sales expansion.
“The current Tesla problem is mainly production capacity, not demand.” On October 26, Musk said.
By Wang Jingyi Qi Zhanning Qiu Yao Li Xiyin