Tesla's domestic production landed in Shanghai and joined hands with Chinese partners not just for a license

After many twists and turns, Tesla, which has been "domesticated" many times, is finally going to build a factory in China.

This morning (June 22), some media reported that Tesla and the Shanghai government signed an investment and factory construction agreement on June 22. Tesla's new factory will be located in Shanghai. This will be Tesla's second automobile factory in the world.

In response to this, Tesla China said "no comment" when interviewed by reporters, but relevant information may be disclosed as early as tomorrow.

An automotive industry analyst told reporters, "Whether it is from the perspective of easing production capacity pressure, expanding market share, or reducing losses, domestic production in China is a good choice. However, the prerequisite for Tesla to produce domestically is that it must apply for approval in accordance with the "Administrative Regulations for New Pure Electric Passenger Vehicle Enterprises" (commonly known as Document No. 27)," said a relevant person in charge of the China Automotive Technology Research Center.

"Although Document No. 27 does not have any provisions on Sino-foreign new energy joint ventures or sole proprietorships, JAC Volkswagen applied for qualifications in accordance with Document No. 27 and obtained approval. Judging from the current situation, the joint venture equity ratio between Tesla and its partners should still be 50:50," the above-mentioned automotive industry analyst pointed out.

It is worth noting that recently, there have been many reports that the issuance of new energy production qualifications may be suspended. Therefore, it will take some time for Tesla's factory to be settled and its products to be produced to relieve its production capacity pressure. "According to the progress of the 15 companies that have been approved, it will take about 8 months to get approval," said the above-mentioned automotive industry analyst.

Domestic rumors finally come true?

In fact, Tesla has been rumored to be "made in China" many times before, and both parties have directly denied the rumors many times. In February this year, there was news that Tesla will form a joint venture with China with a 50% investment ratio to build a production base with an annual output of 500,000 vehicles in the Lingang area of ​​Shanghai.

Shanghai Lingang issued a clarification announcement this evening stating that the company has not had any contact with Tesla, nor has it had any intention of cooperating with Tesla on its factory construction in China, and has not signed any agreement.

An insider close to Tesla told the reporter that Tesla did hold localization talks with places including Shanghai and Ningbo, but the two sides failed to reach an agreement at the time because the conditions proposed by Tesla were too high.

In a conference call after Tesla released its first quarter report this year, when asked whether Tesla would have a corresponding plan in response to China's recent proposal to orderly relax restrictions on the shareholding ratio of automobile joint ventures, Tesla CEO Elon Musk said, "We will have a clear plan by the end of the year, including production plans for the Chinese market."

Judging from today's news, Musk's statement may have come true. Earlier, there were reports that Guosheng Group and Shanghai Electric and other companies were competing for the opportunity to build a joint venture with Tesla, and Shanghai Electric was the most likely candidate.

Shanghai Electric announced this morning that it had received a notice from the China Securities Regulatory Commission that it would hold a working meeting of the Merger and Acquisition Review Committee to review the company's asset restructuring. After applying to the Shanghai Stock Exchange, the company's A-shares were suspended from trading on June 22, 2017, and will resume trading after the company announces the review results.

Anxious to solve the problem of production capacity and profit in China

In the industry, sales of 50,000 vehicles have always been regarded as the "bottom line for domestic production." According to the China Imported Car Market Database, Tesla's customs import volume last year was about 11,000 vehicles, accounting for about 15% of its global sales; the import volume in the first quarter of this year was about 4,900 vehicles.

From this point of view, Tesla is far from reaching the "domestic passing line". In this regard, some analysts believe that this may be related to the production capacity constraints and profit challenges faced by Tesla.

In terms of production capacity, Tesla's US factory currently has a production capacity of about 100,000 vehicles, and its most important volume car, the Model 3, will be mass-produced in July this year. This car is crucial to improving its profitability and expanding its market share.

Tesla plans to produce 5,000 Model 3 vehicles per week this year, and increase the number to 10,000 vehicles per week in 2018. Since it began accepting reservations at the end of March last year, the number of Model 3 orders worldwide has exceeded 400,000 as of mid-January this year.

In addition to production in China, Tesla also plans to build a factory in India to ease the increasing pressure on production capacity.

In terms of reducing losses, Tesla's first quarter report this year showed that its net loss reached $397 million, an increase from $282 million in the same period last year. In addition, the net loss attributable to common shareholders increased by 17% year-on-year to $330 million.

In 2014, Tesla lost $294 million, $889 million in 2015, and $670 million last year, with an average annual loss of more than $600 million.

It is worth noting that my country is about to implement a new energy credit system. According to the "Measures for the Parallel Management of Passenger Car Enterprises' Average Fuel Consumption and New Energy Vehicle Credits (Draft for Comments)" issued by the Ministry of Industry and Information Technology, the new energy vehicle credit ratio requirements for passenger car companies are 8%, 10% and 12% respectively from 2018 to 2020. This means that companies with insufficient new energy vehicle production must purchase enough credits from other companies to meet the requirements.

In the United States, Tesla has earned a lot of money through this system, and China's huge automobile market may bring it more "extra income."

In addition, domestic production can also help Tesla lower its price and help it conquer the Chinese new energy vehicle market. Even the Model 3, which costs $35,000, costs at least 350,000 yuan in my country, which is more than 30% higher than the price abroad.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.