Tesla Plans To Set Up Greater China To Increase The Weight Of Its Business In China.

- Nov 22, 2019-

According to a report by the US financial media Bloomberg, Tesla is planning to restructure its business structure in Asia. Tesla may split its Asian division and independently create a brand new Greater China region, radiating business in the mainland and Hong Kong, Macao and Taiwan regions. Yes, Tesla's China business is essentially a "China office." It is a department that relies on the Asia-Pacific region and even the US headquarters is extremely sticky.

To sum up, it is probably that Tesla plans to set up Greater China to increase the weight of its business in China.

So why?

The reason is actually very simple: the Chinese market is the biggest test for Tesla to become a mainstream car company. It is Tesla's ultimate touchstone from product strength to service capability. The most important thing is China's new energy vehicle environment. It may be The only Shura field that meets the conditions of the Tesla blueprint incubation.

Can the Chinese get the world?

The first reason: the Chinese auto market is big and growing, especially luxury cars and electric cars.

The logic behind Tesla's establishment of Greater China: Is China the key to Musk's victory?

We have calculated the sales data of the BBA top three in Europe/US/China in January-April this year (data source carsalesbase.com).

Among them, Mercedes-Benz Europe sold 302,176 vehicles, up 0.36% from last year's 301,102 vehicles; the United States sold 104,278 vehicles, down 11.9% from 116,682 vehicles last year; China sold 19,735 vehicles, up 11.48% from last year's 176,927 vehicles.

BMW Europe sold 275,283 vehicles, up 0.3% from last year's 274,447 vehicles; the United States sold 97,704 vehicles, up 0.4% from last year's 97,317 vehicles; China sold 180,145 vehicles, up 29% from last year's 139,695 vehicles.

Audi Europe sold 263,927 vehicles, down 5.9% from 280,465 vehicles last year; the United States sold 63,139 vehicles, down 8.7% from 69,156 vehicles last year; China sold 205,552 vehicles, up 20.6% from 170,437 vehicles last year.

From the above figures, we can draw the following two conclusions: China's luxury car market melody is on the rise; China's luxury car market share is approaching, and even have the opportunity to surpass the entire European market.

Then, we selected Tesla's current sub-segments – medium-sized luxury sedan/SUV, large luxury sedan/medium-large SUVs, and inquired about the sales of BBA models at the same price in China in the first quarter of this year, including Mercedes-Benz C-class + GLC + S-class + GLE; BMW 3 Series + X3 + 7 + X5; Audi A4L + A8 + Q5 + Q7 (data source carsalesbase.com, BBA official data).

The logic behind Tesla's establishment of Greater China: Is China the key to Musk's victory?

Among them, Mercedes-Benz sales were 39319+36704+5441+7656=89120; BMW sales were 41134+33866+4973+7623=87596; Audi sales were 40984+32179+3084+5002=81249.

In other words, the BBA is the top three, and the segment of competition between China and Tesla in the same region has theoretically occupied (89120+87596+81249)*4 million units.

If you count the second and third-line luxury brands, the 20-year Chinese auto market contribution of nearly 1.4 million Tesla "accessible market share" will not be a big problem.

As long as Musk can cut one-tenth of this oriental cake, plus almost 250,000 American sales, and the upcoming European market, the goal of completing the global annual sales of 500,000 is only in the fingers. Between - not to mention the current competitors of Model3 in China, only the Weilai ES6 counts one.

The logic behind Tesla's establishment of Greater China: Is China the key to Musk's victory?

Of course, the premise of achieving the goal is that Tesla has this harvesting ability - but considering that the Model3 sales in the US market can surpass the sales of BBA+ Lexus + Volvo + Infiniti + Acura, as long as the domestic Model3 is in the mood, Musk The KPI can be a high probability.

Finally, we calculated the sales data of European/US/China new energy vehicles (including plug-in hybrid + pure electricity) in the first quarter of this year (data source insideevs.com, China sales from the passenger car market information joint meeting) .

European new energy vehicles sold 126,885 units, up 41.2% year-on-year; US new energy vehicles sold 61,166 units, up 10.6% year-on-year; China's new energy vehicles sold 254,000 units, up 117.8% year-on-year – sales of 85,536 units in April, up 24.5 points year-on-year %.

From the data point of view, China's new energy vehicle market far exceeds the total size of Europe + the United States, and still maintains a high growth rate expectations,

The logic behind Tesla's establishment of Greater China: Is China the key to Musk's victory?

In the past May, Tesla won 58% of the US new energy vehicle sales with just one Model3, and even Tesla only got the US in China with Model3 and ModelY, which is about to join the battlefield. With one-third of the market share, Tesla also has the opportunity to sell nearly 200,000 vehicles in China a year.

The numbers don't lie, and sales are particularly attractive.

China's automobile manufacturing industry 36 years later

The second reason: Almost all major international car companies have established joint ventures in China, which is also a standard entry for a true 21st century “International Car Enterprise”.

In 1983, Beijing Auto and AMC (American Automobile Group) established Beijing Jeep, which is China's first auto joint venture, 36 years from now. Thirty-six years later, China has grown into a big car country with 28 million cars a year. At the same time, not only is our traditional strength, but quality.

Here are three examples: BMW Brilliance Plant, GAC Toyota Plant, and SAIC Volkswagen.

The BMW Brilliance Tiexi Plant is the 25th factory of the BMW Group. It is defined as a “world-class factory” in the BMW family. It covers an area of 2.07 square kilometers – a Leipzig plant also defined as a “world-class factory”. The area is 0.81 kilometers.

The logic behind Tesla's establishment of Greater China: Is China the key to Musk's victory?

Add an egg here: Tiexi Factory is the only car factory that has obtained the national AAAA-level scenic spot certification. In addition to the size of the scenic spot, it is the highest automation rate in the 31 factories in BMW, 95%. The Germans call this "Industry 4.0".

As for BMW Brilliance's engine plant in Shenyang, BMW is the only engine plant with a foundry in addition to Germany.

The Guangzhou Automobile Toyota Plant, which is more than 2,000 kilometers from Liaoning, is also the top factory that is loved by the world's largest car companies.

As the first factory outside the Japanese headquarters to build a TNGA-based production line, the Guangzhou-Guangzhou Toyota plant in Nansha, Guangzhou can achieve an ultra-low component failure rate of 0.38 PPM—that is, only 0.38 per 100,000 components may fail. This is also the main strength of the Guangzhou Automobile Toyota plant to become Toyota's global model factory.

The logic behind Tesla's establishment of Greater China: Is China the key to Musk's victory?

In the middle of the two factories is the support of the public in China.

SAIC Volkswagen was established a little later than Beijing Jeep, but it is still one of the "first-old" joint ventures. Since 2009, SAIC Volkswagen has been the car owner with the largest number of cars in China – this figure has reached 14 million by 2017.

In addition, in the 2019, when new energy vehicles and domestically-made new vehicles are blooming, there is a new car power that is known as the benchmark Tesla. It was founded by the veterans of the SAIC Volkswagen Department. The founder of Skyrim is SAIC. Zhang Hailiang, the youngest former vice president of the group; CTO is Niu Shengfu, who was responsible for managing the SAIC Volkswagen R&D team; and Xiang Yang, who served as the head of SAIC Volkswagen's sales department, and Liu Yan, who was the senior manager of SAIC Volkswagen after-sales quality.

The logic behind Tesla's establishment of Greater China: Is China the key to Musk's victory?

These examples illustrate one point: China's automobile manufacturing industry has the ability to stand in the highest position in the world in terms of scale and quality, and even talent reserves.

This is due to the brave attempt of the "joint venture car company", and now, the "joint venture car enterprise" with Chinese characteristics has in turn become one of the basis for judging the scale of a car company - if a large international car company does not have China Factory, then this car company can certainly not be in the first echelon, here can be several brands.

As the first overseas car company to be wholly-owned in China, Tesla is obviously not willing to become a frustrated person in the global market.

If Musk himself expresses his feelings about the Chinese auto industry, he said at the Tesla shareholders meeting last week, "In this factory of this size, I have never seen a fast and new construction like the Shanghai Super Factory. Good, that is the most real experience.

The logic behind Tesla's establishment of Greater China: Is China the key to Musk's victory?

At the same time, Musk even acknowledged the rationality of "building multiple factories in China." His original words are "China is really too big, building more factories, expanding production scale and saving transportation costs. These are completely feasible."