SOURCE / INDUSTRIES
Tesla could pose big threat to Chinese domestic players
Published: Jan 07, 2020 10:33 PM

Graphics: GT



Made-in-China Tesla cars could have a big impact on China's domestic players with the company's obvious advantages including a high-tech electronic system and outstanding performance, but in the long run, it could eventually promote the Chinese new-energy vehicle (NEV) industry's healthy development, an auto industry analyst said Tuesday.

The comments came as Tesla delivered its first batch of made-in-China Model 3 cars to customers at its Shanghai factory, with founder and CEO Elon Musk showing up at the delivery ceremony on Tuesday.

Such a high-profile ceremony represented a microcosm of Tesla's rapid development in China - from starting construction on the factory in Shanghai to delivering its first China-made Model 3, it took only 12 months - and Musk's ambitions to take part in China's NEV market.

Days before the ceremony, Tesla lowered the Model 3's price. The price of the basic model, for example, decreased from 355,800 yuan ($51,225) to 323,800, or 9 percent. Combined with Chinese government subsidies for NEVs, the final price went down to as low as 299,000 yuan.

"The Model 3's high performance, along with the decreased price and the company's efficient management, are very attractive to customers and could pose a big threat to Chinese domestic NEV makers," Wu Shuocheng, a Shanghai-based car analyst, told the Global Times on Tuesday.

According to Tesla, 30 percent of the parts used in the first batch of made-in-China Model 3s are from China, and that ratio is expected to hit 70 by the middle of this year and 100 by the end of the year, according to media reports. 

"As the use rate of domestic parts goes on, it [Tesla] has more potential scope to further lower the price, which could cause panic among domestic brands," Wu noted.

However, while Tesla could be a strong competitor to domestic players, it could also help improve China's NEV industry, according to industry insiders.

Xu Heyi, chairman of Beijing Automotive Industry Corp, which is scrambling to take part in China's NEV market, said at a recent conference that China's auto industry is undergoing a fundamental shake-up and Tesla could be a benchmark for Chinese auto producers, zaobao.com reported.

"The auto industry is closely watching Tesla's manufacturing costs, procurement costs and technology paths. Tesla is a good benchmark for the automotive industry, helping to drive the NEV industry forward," Xu said.

Wu also noted that he is not pessimistic about Tesla's strong momentum in China, as Musk's goal is to take market share from traditional energy vehicles and promote the use of NEVs.

Graphics: GT

 

At present, China's NEV makers are more or less reliant on government policies such as NEV subsidies, which is not really healthy for the industry's development, Wu said, adding that Tesla's appearance could cause panic among domestic players in the short term. 

"But in the long run, it will help Chinese regulators and industry players to rethink China's NEV direction for the future."


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