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Continue reading Mercedes joins NACS charging push, gets Tesla Supercharger access
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Continue reading Tesla rolls out global customer referral incentive as EV price war heats up
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Permalink | Email this | CommentsTesla's push to start handing over a portion of its battery pack production to suppliers during the Model 3's changeover window is a choice it made after remeasuring costs, according to local media.
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Prototypes of the revamped Model 3 are currently being tested on the road at Tesla's Shanghai factory over weekends, with the production line doing further refinement work, according to local media.
(Image: Screenshot from a Tesla China video.)
At Tesla's (NASDAQ: TSLA) Shanghai plant, the Model 3's production workshop is currently under a high level of secrecy, but production line tuning is almost complete, local media Jiemian said today, citing an employee of a third-party supplier working at the plant.
Prototypes of the revamped Model 3 are currently being tested on the plant's roads over weekends, with the production line doing further refinement work, the employee said.
Tesla is planning to launch an updated Model 3 to compete more favorably with local Chinese car companies, the report said.
One of Tesla CEO Elon Musk's key trips to China previously was to visit Tesla's Shanghai factory to inspect the new Model 3, the report said.
Musk visited China in late May and toured the Tesla Shanghai factory, which is Tesla's largest factory in the world, producing the Model 3 and Model Y with a current annual capacity of more than 1 million vehicles.
On March 1, Reuters reported that Tesla was working to retool its Shanghai assembly plant for a revamped version of the Model 3, a project codenamed Highland by Tesla.
The Highland version of the Model 3 is expected to go into production in Shanghai in September, the Reuters report said, citing a person familiar with the matter.
With Highland, Tesla aims to cut production costs and boost the appeal of the electric sedan, which debuts in 2017, people involved in the project said, according to the previous Reuters report.
On May 16, Bloomberg reported, citing people familiar with the matter, that Tesla was nearing the final stages before starting trial production of its revamped Model 3 sedan in Shanghai.
The revamped Model 3 is slightly longer, sportier and has a sleeker interior design than earlier versions, those people said, according to the report.
Earlier today, Bloomberg reported that Tesla is laying off some battery production workers at its Shanghai plant, amid steep discounts on cars from all manufacturers.
Earlier this week, Tesla began notifying some employees on the battery assembly line at the first phase of its plant in Shanghai about the layoffs, the report said.
Jiemian's report today said two Tesla factory floor employees in Shanghai confirmed the information, but they were not sure of the percentage of layoffs.
Yesterday, local media outlet Shifang Zhixing reported that the layoffs on Tesla's battery assembly line in phase 1 would exceed 50 percent.
The layoffs are partly due to the US government's ban on subsidies for batteries imported from China, requiring local car companies to use US-made batteries, the report said, citing an insider.
Jiemian's report today cited a person familiar with the matter as saying that the batteries made at Tesla's Shanghai plant are for domestic models and not for North America.
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Auto industry players should not disrupt fair competition with abnormal prices and should avoid cutting prices in a reckless manner, a MIIT official said.
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Price wars are clearly not what China's main industry regulator wants to see.
An official from China's Ministry of Industry and Information Technology (MIIT) said at the 2023 China Auto Forum in Shanghai on July 6 that participants in the country's auto industry should not compete with abnormal prices, according to a report on state broadcaster CCTV today.
So far this year, the Chinese auto industry has seen the largest wave of price cuts in its history, including more than 100 models from more than 30 brands, some at any cost, the report noted.
In response to the phenomenon, the MIIT source said that the development of China's auto industry has entered a new phase, with new energy vehicles (NEVs) forming a certain lead and auto companies should regulate their marketing activities, the report said.
Auto industry players should not disrupt fair competition with abnormal prices and should avoid reckless price cuts, while strengthening technological innovation and improving product quality, the MIIT official Miao Changxing was quoted as saying in the report.
Yesterday, the China Association of Automobile Manufacturers (CAAM) and 16 major automakers jointly signed a pledge to maintain fair market order in the auto industry.
The 16 car companies include BYD, Nio, Li Auto, Xpeng, Tesla, SAIC, Geely and Great Wall Motor, who pledged to maintain a fair competition order and not to disrupt the order in the market with abnormal prices.
The initiative is just the beginning, and further restraint on bad behavior, including malicious price cuts, will depend on self-regulation and regulatory means, Fu Bingfeng, executive vice-president and secretary general of the CAAM, was quoted by CCTV in the report today.
Separately, Xu Changming, vice director of the National Information Center, said yesterday at the 2023 China Auto Forum that Tesla's average profit per vehicle is high enough that it has ammunition if it wants to fight price wars.
Tesla has previously cut its price in China by RMB 30,000 yuan ($4,140), and its average profit per vehicle is $10,426, leaving room for a 40,000 yuan price cut if the price war continues, Xu said, according to a video circulating on social media.
The calculation is based only on Tesla's 1.31 million global deliveries last year, and if it reaches its 1.8 million delivery target this year, then costs are expected to fall further, Xu noted.
Tesla's average profit per vehicle is 8.5 times that of BYD, whose figure last year was RMB 8,854 yuan per vehicle, according to Xu.
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Earlier this week, Tesla began notifying some employees on the battery cell assembly lines at the first phase of its plant in Shanghai about that layoff, according to Bloomberg.
(Image: Screenshot from a Tesla China video.)
Tesla (NASDAQ: TSLA) is laying off some battery production workers at its Shanghai plant, amid heavy discounts on cars from all manufacturers, Bloomberg reported today.
Earlier this week, Tesla began notifying some employees on the battery cell assembly lines at the first phase of its plant in Shanghai about the layoffs, the report said, citing people familiar with the matter.
Some employees have been allowed to move to another shop, such as stamping, painting or general assembly, the people said. It's unclear how many battery workers may be let go, or the specific reasons behind the layoffs, according to the report.
Tesla employs about 20,000 people at its Shanghai plant, which can produce about 1 million vehicles a year, the report noted.
While Tesla uses batteries made by LG Energy Solution and CATL in its vehicles, those battery cells must be made into battery modules and packs before they can be installed in the cars, a process that is done for the most part in Tesla's battery workshop.
Some automation equipment that could help replace human labor on the battery production line is in the design and construction stages, one of the people said, according to the report.
The report did not provide more details on the layoff plan, though a local media outlet reported yesterday that more than 50 percent of the phase one battery assembly line workforce would be cut.
The layoffs are partly due to the US government's ban on subsidies for batteries imported from China, requiring local car companies to use US-made batteries, Chinese media outlet Shifang Zhixing said in a report yesterday, citing an insider.
In addition, the ample battery assembly capacity at Tesla's Shanghai plant is also a major reason for the layoffs, according to the report.
The battery assembly line in phase two has a capacity of 870 batteries on a single shift, while the day shift plus the night shift in the two battery plants can provide 3,400 batteries, more than the amount needed for vehicle production, according to the report.
Vehicle manufacturing-related jobs have not been affected by the layoffs yet, after all, Tesla vehicle sales are still strong, the report said.
Tesla sold 93,680 China-made vehicles in June, including exports, the second highest on record after 100,291 in November 2022, according to data released by the China Passenger Car Association (CPCA) on July 4.
Tesla's Shanghai plant produces the Model 3 and Model Y, and their breakdown sales figures are currently unknown.
In May, Tesla sold 42,508 vehicles in China, ranking third in China's new energy vehicle (NEV) market with a 7.3 percent share, according to the CPCA. Tesla's Shanghai plant exported 35,187 vehicles in May.
Model Y retail sales in China in May were 31,054, making it the best-selling SUV in China that month, according to the CPCA's rankings.
From January to May, Model Y retail sales in China were 152,461 units, also the best-selling SUV in China during that period.
Yesterday, 16 car companies, including Tesla, BYD, Nio, Xpeng and Li Auto, signed a pledge in Shanghai to jointly maintain order in China's auto market and not to disrupt fair competition with abnormal prices.
Earlier today, Tesla ramped up referral incentives for the Model 3 and Model Y in China to boost sales of the two models.
Tesla to equip revamped Model 3 in China with CATL's new battery, report says
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Tesla sold 93,680 China-made vehicles in June, including exports, the second-highest number on record after November 2022's 100,291 vehicles.
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Tesla (NASDAQ: TSLA) has increased referral incentives in China for the Model 3 and Model Y to boost sales of the two locally produced models.
Starting July 7, Tesla owners who refer others to buy the Model 3 and Model Y will receive an upgraded benefits package, the US electric vehicle (EV) maker said today on Weibo.
The package includes a RMB 3,500 ($410) cash bonus for the purchaser, which can be used against the purchase price, and a free 90-day trial of Enhanced Autopilot (EAP) assisted driving software.
Referrals will be rewarded with 7,000 points that can be redeemed for gifts including a TeslaMic, Model Y for toddlers, or supercharging miles.
Tesla has previously run an owner referral program in China for several years, which offers 1,500 kilometers of free supercharging for both the referrer and the purchaser.
The referral program was discontinued on September 18, 2021, and reinstated on October 24, 2022, but only offered bonus points.
The upgrade to the referral bonus for the Model 3 and Model Y comes on the heels of Tesla's July 1 announcement of an RMB 35,000 to RMB 45,000 discount for the full line of Model S and Model X in China.
The Model S and Model X are not produced in China, and their deliveries here began in late March.
Tesla was also encouraging owners to recommend friends to buy the two models. If a customer buy the Model S and Model X on someone else's referral, they would receive an additional RMB 7,000 bonus, free supercharging benefits for three or six years, and 90 days of free EAP benefits. The referrer will then receive a 48,000-point bonus that can be redeemed for supercharger miles.
Tesla sold 93,680 China-made vehicles in June, including exports, the second highest on record after 100,291 in November 2022, according to data released by the China Passenger Car Association (CPCA) on July 4.
That's up 18.72 percent from 78,906 units a year ago and up 20.57 percent from 77,695 units in May.
Tesla's June sales in China and the breakdown of China-made vehicles exported are expected to be known in the coming days.
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Tesla offers up to $6,200 discounts for Model S and Model X in China
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These car companies have pledged to regulate their marketing activities and not to disrupt the order of fair competition in the market with abnormal prices.
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More than 10 car companies, including major electric vehicle (EV) startups, have pledged to jointly maintain a fair market order in China's auto market, at a time when the EV industry is growing rapidly.
At the 2023 China Auto Forum in Jiading, Shanghai, today, the China Association of Automobile Manufacturers (CAAM) and 16 major automakers signed a pledge to uphold fair market order in the automotive industry.
This is to maintain a good auto market order, jointly create a good consumer environment, and actively stabilize and promote auto consumption, they said at the conference.
The car companies that signed the commitment include:
China FAW, Dongfeng Motor, SAIC, Changan Automobile, BAIC, GAC, China National Heavy Duty Truck, Chery, JAC, Geely, Great Wall Motor, BYD, Nio, Li Auto, Xpeng, and Tesla.
The following is the main content of the commitment letter:
First, we will abide by the rules and regulations of the industry, regulate marketing activities, maintain a fair competition order, and not disrupt the fair competition order of the market with abnormal prices.
Second, we will pay attention to marketing methods, will not exaggerate or conduct false marketing, not to mislead consumers to attract attention and increase customer acquisition.
Third, we will put quality first, use quality-oriented, high-quality products and services to meet the people's needs for a better life.
Fourth, we will actively fulfill our social responsibility, and take an active role in helping to stabilize economic growth, increase confidence and prevent risks, and work together to make a contribution to national economic growth.
It should be noted that the commitment is self-regulatory and not legally binding, and it was signed after the price war at the beginning of the year and the emergence of a war of words between several EV companies and their supporters.
Since early March, a rare price war has erupted in China's auto industry, which has not boosted sales but has instead triggered a wait-and-see mood among consumers, resulting in car sales not seeing an increase.
On March 22, the CAAM called for the hype about price cuts in China's auto industry to cool down to return the industry to normal operation and ensure healthy and stable development of the industry throughout the year.
After that, the price war in China's auto industry gradually subsided.
It is worth noting that although these car companies pledged today not to disrupt the fair order with abnormal prices, it does not mean that they cannot cut prices when facing future challenges.
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Chinese automakers have now crossed the inflection point for global influence, with local brands expected to hold 65 percent of the market share in China by 2030, AlixPartners said.
China, the world's largest auto market, has been dominated by foreign brands for many years, but that is about to change with the rapid growth of local brands in the past few years.
This year, China will become the world's largest auto exporter, and for the first time, local brands are expected to overtake overseas brands in market share, AlixPartners, a New York-based consulting firm, said in a report yesterday.
Chinese automakers have now crossed the inflection point for global influence, with local brands expected to hold 65 percent of the market in China by 2030, said Stephen Dyer, co-head of AlixPartners Greater China.
In the first half of 2020, local brands' monthly share of the Chinese auto market was at slightly more than 30 percent, with German and Japanese brands then at around 30 percent and 25 percent, respectively, according to the China Passenger Car Association (CPCA).
In October 2022, the share of local brands in the Chinese auto market reached 51.53 percent, the first time in history that the monthly share exceeded 50 percent, according to data monitored by CnEVPost.
While local brands are on the rise, foreign brands are gradually declining. In October last year, the share of German brands fell to 19.25 percent and Japanese brands fell to 18.94 percent.
In the first five months of this year, the share of local brands has remained at around 50 percent, including 50.24 percent in May, according to the CPCA.
Chinese automakers are poised to become a dominant force in the global auto industry in the coming years, thanks to government support for new energy vehicle (NEV) companies, automakers' focus on vehicle styling and customer orientation, and the accelerating pace of NEV launches, according to AlixPartners.
The business models evolved by Chinese automakers are also likely to be successful in Europe and the US, and Chinese automakers will become a dominant force in the global auto industry in the coming years, the report said.
However, industry disruption from Chinese manufacturers won't necessarily make quick waves in overseas markets as traditional car companies around the world are focused on dealing with the impact of innovation from Tesla, the report also noted.
The success of Chinese NEV brands provides a reference for global automakers, AlixPartners said, adding that local brands are better able to meet the needs of a new generation of tech-savvy consumers while maintaining a strong value for money and offering a better digital marketing experience than joint venture brands.
Models that are popular with Chinese consumers are also increasingly likely to be popular with global consumers, and multinational automakers must be prepared to fundamentally change their working models as Chinese-style competition eventually comes to their home markets as well, the report said.
AlixPartners expects auto sales in China to grow 3 percent in 2023 and then maintain a slow but steady pace to reach a level of 50 million units around 2050.
Retail sales of passenger cars in China were 20.54 million units in 2022, up 1.9 percent year-on-year, with NEVs contributing 5.67 million units, or 27.6 percent, according to the CPCA.
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As of July 5, Xpeng's US-traded ADR was up about 75 percent cumulatively since June 9, when the G6 began pre-sales.
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Xpeng's (NYSE: XPEV) new SUV, the G6, has received good initial acceptance and now the company has an important task: ramping up production capacity as soon as possible.
Customers have been very enthusiastic about the G6, and those who order it now will have to wait about 10 weeks, Brain Gu, Xpeng's vice chairman and president, told English-language media reporters, including CnEVPost, at an online conference Wednesday night.
Xpeng wants shorter and shorter delivery cycles for the G6, but right now the model still needs capacity ramp-up, Gu said.
He mentioned that the G6 has received a significant number of orders, which would help Xpeng see monthly deliveries reach 15,000 units in the third quarter and 20,000 units in the fourth quarter.
Xpeng officially launched the G6 in China on June 29 with a starting price of RMB 209,900 ($28,980), significantly lower than the starting price of RMB 263,900 for the Tesla (NASDAQ: TSLA) Model Y, its main competitor, in China.
The company began pre-sales for the G6 on June 9 and later announced that the model had received more than 25,000 orders within 72 hours.
At the launch event on June 29, Xpeng chairman and CEO He Xiaopeng said the G6 had more than 35,000 pre-sales orders as of June 28 since the pre-sale.
The G6 is expected to become the top-selling smart electric SUV priced at the RMB 250,000 level in China within two months, he said at the time.
In an interview with local media following the G6 launch, Mr. He said the G6's monthly sales target is at least 10,000 units.
CnEVPost's latest look at the Xpeng app shows that the G6's lower-priced Pro versions all currently have an estimated wait time of 10 weeks, while the Max versions all have 12 weeks.
As the electric vehicle industry in China becomes more competitive, quick deliveries are important to capitalize on the initial hype of new models.
Xpeng's local peer Li Auto (NASDAQ: LI) has proven this to be true, with its three models -- the Li L7, Li L8 and Li L9 -- all currently having 2-4 week wait times.
Nio (NYSE: NIO) also learned its lesson when it launched several new models this year, with deliveries of the new ES6 starting the night it was launched on May 24 and the ET5 Touring on June 16, the day after its launch.
Although the G6 is seen as critical to Xpeng, the company's management believes a car company cannot bet its future on just one model.
In the auto industry, carmakers need to think long-term and be systematically competitive, Mr. He said earlier this month.
Investors are clearly bullish on the G6's potential, with Xpeng's US-traded ADRs up about 75 percent cumulatively as of July 5 since the G6 began pre-sales on June 9.
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Xpeng delivers 8,620 vehicles in Jun, Q2 deliveries exceed guidance range
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