Musk marvels at Shanghai Speed Teslas bullish view on China or add notes

category:Finance
 Musk marvels at Shanghai Speed Teslas bullish view on China or add notes


Earlier this month, the first financial and economic reporter saw on the spot at the Shanghai factory in Tesla that the main building of the super factory, which occupies nearly 1300 mu in Shanghais Lingang, has entered the stage of capping.

Tesla has a growing appetite for localization in China. Following the efforts being made to build Teslas Shanghai factory, on June 13, Tesla confirmed to First Financial Journalist that, considering the feasibility, Tesla might build more production facilities in China. In addition, Tesla is expected to use the technology acquired by Maxwell, a dry battery and supercapacitor manufacturer, to ensure its future expansion and cost control of electric vehicles.

Earlier this year, Tesla Super Factory officially opened in the port-vicinity industrial zone. Source: Shanghai Release

Hope to further expand production in China

For Tesla, China is the second largest market after the United States.

In early 2019, Tesla 3 Super Factory (Phase I) officially started construction in Shanghai Port-Linking Industrial Zone, China. As the largest foreign-funded manufacturing project in Shanghais history, the factory has four major automotive manufacturing processes, including stamping, welding, painting and assembly. The first phase of the plant has a planned capacity of 250,000 vehicles per year.

Musk had previously said that as Teslas first super factory outside the United States, he believed that the Shanghai super factorys annual production of 500,000 cars was only a medium-term goal, which could exceed 1 million in the long run, but he did not give a timetable at that time.

In addition to commenting on Super Factory No. 3 being built in Shanghai, after half a year, Musk, which invests actively in China, has a new view of the Chinese market. At the shareholdersmeeting, he put on export reputation. Given the huge size of the Chinese market, Tesla may build more production facilities in China.

Tesla Shanghai Super Factory under construction (April 2019). Xinhua News Agency Map

In this regard, on June 13, Tesla Chinas relevant personages confirmed Musks statement to the First Financial Journalist, saying that the latest version of Musk is the correct calibre.

Musk said he hopes to build Tesla factories on every continent in the world in the future, especially in China and Europe. In Musks view, Teslas overseas car sales face high tariffs, slow supply chains and repayment due to economic considerations, which can be improved by building local factories in overseas markets.

China is vast, so it may be reasonable to build factories in other parts of China to cut logistics costs, Musk said. The faster you expand, the more capital you have. Musk said localized production in China would accelerate Teslas car delivery and help companies improve capital efficiency.

However, Musk also said that further expansion in China will not be forthcoming. We cant spend too fast. He said. At present, the total investment of Tesla Shanghai Super Factory project is as high as 50 billion yuan, and the first phase investment is 16 billion yuan.

It is noteworthy that the pace of Teslas localization is accelerating. Last month, Chinas homemade version of Model 3 began accepting bookings, starting at 328,000 yuan, with delivery expected to take six months to 10 months. Tesla Shanghai Super Factory also launched open recruitment last month, involving 25 positions in six departments. The hiring scene was delayed for three hours, attracting job seekers from all over the country, including some former employees from domestic joint ventures and independent car companies.

Visitors are in close contact with the Tesla Exhibition Vehicle. Information Map of Xinhua News Agency

Getting Better Battery Technology

Musk said at the meeting that Tesla had a good year, delivering 245,000 cars in the previous year, which exceeded the total deliveries in previous history. After doubling production last year, Teslas car production is expected to grow by 60% to 80% this year. But for the core technology of electric vehicles - batteries, Musk pointed out that Teslas product promotion is still limited by the scale of battery production, but he pointed out that Teslas recent acquisition of Maxwell is a very strategic acquisition.

On May 27, Tesla announced the completion of a stock exchange for Maxwell Technologies.

Maxwell has very important technology that will have a significant impact on the cost and scale of battery production, while reducing the cost and capital needed to expand battery production. Musk said.

Tesla bought Maxwell, a maker of dry batteries and supercapacitors, at a valuation of $218 million (about 1.5 billion yuan) this year. It is noteworthy that, almost at the same time, Panasonic announced that there would be no new investment in the equipment of Tesla 1 Superplant. Previously, Super Factory 1 in Nevada, although owned by Tesla, was occupied by Panasonic, where Panasonic owned a battery production line.

In response, foreign media reported that Panasonic insiders believe that Teslas envisaged growth curve is too steep. Tesla had long wanted to get rid of the disadvantage of Panasonics battery constraints.

Maxwells headquarters in China is located in Pudong, Shanghai. It is divided into two parts: supercapacitor and high voltage capacitor. Maxwells two core businesses are the key to Teslas acquisition: dry battery electrode technology and supercapacitor-driven energy storage technology. Both technologies can significantly enhance the endurance of electric vehicles, increase power, prolong battery life, maintain stability at extreme temperatures, and help reduce costs.

Maxwells previous technical forward-looking guidelines put forward a path of up to 500Wh/kg - a data that is a stunt in the market competition for all electric vehicles. The view of the industry is that only by increasing the energy density of batteries to 500Wh/kg and making electric vehicles with theoretical endurance of 1200 km and actual endurance of more than 800 km, can electric vehicles be popularized on a large scale.

It is widely believed that Tesla acquired new battery technology by acquiring Maxwell, which is expected to improve battery performance and control costs while ensuring the supply of new batteries in new capacity such as Shanghai Super Factory 3.

Teslas acquisition was completed last month and will enhance its battery technology. Source: Maxwell website

Tesla was previously the worlds largest lithium battery consumer. We need to take control of our own destiny, so we need to make our own batteries. Musk said. Teslas Chinese counterparts have previously confirmed to First Financial Journalist that Tesla has also contacted Chinese battery manufacturers.

Musk knows China very well, and deeply understands the huge potential of consumption in Chinas automobile market, and the importance of automobile industry, especially new energy, for the investment of local governments in China. Gu Yatao, executive director of Greater China at Roland Berger, a consulting firm, told First Financial Journalist that there was a possibility that Tesla could build a factory outside Shanghai. However, in Gu Yataos view, according to Teslas previous style of operation, logistics costs should not be the main consideration. In the end, Tesla should weigh factors such as the release of consumption potential, productivity climb, and specific advantages for attracting Tesla to build a factory.

Ye Liang, an Ernst & Young partner who has followed Teslas development for a long time, told First Financial Journalist that Tesla hopes to develop well in China in the long run, and localization is an important choice and the only way to go. From the development of Chinas automobile market in recent decades, no mainstream imported car has won the joint venture and domestic car price. Mercedes-Benz, BMW, Audi, Toyota, Honda and other overseas car companies have achieved homemade. On the other hand, the localization of the core components of electric vehicles such as batteries is also conducive to reducing costs.

Moreover, from past experience, international automobile companies in China from the life cycle of investment returns, profits are better than foreign plants, Musk as a shrewd successful businessman, will calculate this account.

Source: First Financial Responsibility Editor: Guo Chenqi_NBJ9931