Phenomenal SUV! Model Y price cuts have just begun, from luxury to civilian, a crushing blow?

1. This report comprehensively discusses the Tesla Model Y's pricing strategy, expected market space, 2021 production and sales forecast, and industry chain price elasticity forecast are an in-depth analysis of Tesla's substantial price reduction for Model Y on New Year's Day 2021 (long-range 339,900 yuan, high-performance 369,900 yuan, a reduction of approximately 150,000 yuan).

2. The price reduction is beyond expectations (previously expected to be around 360,000), which will greatly boost sales. It is expected that the weekly production of domestic Tesla will reach nearly 8,000 vehicles at the beginning of 2021 (5,000 Model 3s and nearly 3,000 Model Ys), and it is expected to climb to 12,000-13,000 vehicles/week by the middle of the year and 15,000 vehicles/week by the end of the year. The annual sales of Model Y will reach 250,000 vehicles

• It is estimated that the domestic production of Tesla will reach 523,000 vehicles in 2021: in terms of production structure, M3 is expected to reach 278,000 vehicles and MY is expected to reach 245,000 vehicles.
• It is estimated that domestic Tesla sales will reach 420,000 units in 2021: in terms of sales structure, M3 is expected to reach 180,000 units, MY is expected to reach 245,000 units, and exports are expected to reach 120,000 units.

• With the acceleration of the localization process of parts and components, especially the introduction of domestic brands of power batteries and the launch of the standard endurance version, if the subsequent Model Y is reduced to below 277,000 (after subsidies), it will hit the market space of 1.6 million vehicles per year.
• If the price is reduced to around 250,000 yuan (after subsidies) in the future, it will hit the market space of more than 2 million vehicles per year, and Model Y will have a crushing advantage over fuel vehicles of the same level in various parameters, which will hit luxury cars in terms of price. As a fuel SUV brand, it has defeated the civilian fuel SUVs of the same price in terms of brand power and performance parameters.

5. Recommendation: Model Y-LG/CATL industry chain high elasticity beneficiary target, continue to recommend CATL , recommend Enjie shares in the midstream segment Kodali 、 Hongfa shares , Top Group (Automobile Group), Xusheng Shares (Automobile Group), Xinzhoubang 、 Tianci Materials (Chemical Industry Group), Putailai , Dangsheng Technology ; Recommended to pay attention to Huayou Cobalt (Nonferrous Metals Group), Ganfeng Lithium (Nonferrous Metals Group), Yahua Group (Colored group) etc.

6. Risk warning: The risk that the production schedule of midstream material manufacturers is lower than expected; the risk that the demand of downstream battery manufacturers and car companies is lower than expected; the risk that the launch of high-quality new models is lower than expected, resulting in the sales of new energy vehicles being lower than expected, etc.

Report Content

1. Tesla product line: luxury positioning and rich models

Product positioning: Luxury brand, comparable to BMW, Mercedes-Benz and Audi

· Rich model variety: 2 sedans (B/C class) + 2 SUVs (medium/large)

· Multiple optional versions of models: Each car has more than two versions to choose from, differentiated by range and performance (standard range, long range, high performance).

· SEXY "combination full line of products sold in China: As the last member of the SEXY family to debut, the domestically produced MY is officially on sale. Tesla has been demonstrating its leading position in electric vehicles with "China speed" for three consecutive years. (Shanghai Super Factory started construction in January 2019, domestically produced M3 was officially delivered in January 2020, and domestically produced MY was officially on sale in 2021)

SUV size, sports car performance: Model Y is a high-performance, fully intelligent mid-size SUV. The long-range version accelerates from 0 to 100 km/h in just 5.1 seconds, while the high-performance version only takes 3.7 seconds.

Domestic M3 upgrade: The appearance, interior, comfort and energy efficiency have been optimized, especially the addition of the heat pump system, which further optimizes the vehicle's energy consumption performance.

1. MY pricing exceeded expectations, and the long-range version of M3 was removed from the shelves

Tesla MY’s pricing strategy is perfect: the previous price was too high, and this substantial price adjustment has created a strong sensory impact, which will significantly boost sales. Media reports said that the first-day orders exceeded 100,000.

· The prices of the domestically produced M3 and MY are lower than those of the same US version: Musk made it clear that the standard range version of MY will not be produced in North America (there was a production plan before, but it was later removed from the official website), but the domestically produced standard range version of MY is expected to be launched.

The domestically produced long-range M3 was removed from the shelves, creating product space for MY: This is mainly to increase the pricing range between M3 and MY, improve product differentiation, and avoid internal competition.

The Chinese market prefers SUV models: From 2014 to 2020, the sales share of SUV in China continued to increase to 36.4% for six consecutive years. Although the total number of passenger cars was affected by the overall economic environment, the proportion of SUV continued to increase.

· Pursuing a more comfortable driving experience than cars of the same level, compact and mid-size SUVs are the main sales contributors: Compact SUVs generally refer to those with a body length between 4,000 and 4,600 mm, and mid-size SUVs generally refer to those with a body length between 4,600 and 5,000 mm. Tesla Model Y is positioned in this category.

1. The domestically produced Model Y is positioned as a mid-size luxury SUV, and its price is lower than that of fuel-powered SUVs of the same level.

The domestically produced Model Y is positioned as a mid-size luxury SUV, but its pricing is similar to that of a mid-size civilian SUV. We predict that the price may continue to drop in the future to hit competitors.

Mid-size luxury SUV market: Main competitors include BMW X3, Mercedes-Benz GLC, Audi Q5, etc.

· Mid-size civilian SUV market: Main competitors include Volkswagen Tiguan, Toyota Highlander, Cadillac XT4, etc.

Compact luxury SUV market: main competitors include BMW X1, Mercedes-Benz GLA, Audi Q3, etc.

The main models of the domestically produced Model Y target market: BMW X3, Mercedes-Benz GLC, Audi Q5

· The main model of the domestic Model Y target market: Weilai ES6, Ideal ONE, Volkswagen ID.4 series

The main models of the domestically produced Model Y target market: BMW X1, Audi Q3, Mercedes-Benz GLA

The main models in the target market of the domestically produced Model Y: Toyota Highlander, Volkswagen Tiguan L, Cadillac XT4, which are the targets of subsequent price cuts

1. Domestic Model Y target market space: 1.12-2.28 million vehicles/year (depending on pricing range)

● Target market:

Mid-size luxury SUV market, with a volume of approximately 500,000 units per year: sales in 2019 and January-October 2020 were 404,000 and 408,000 units respectively, with a CAGR of 30%.

The mid-sized new energy SUV market has a volume of about 200,000 units per year: sales in 2019 and January-October 2020 were 124,000 and 139,000 units respectively, with a compound annual growth rate of over 50%.

Compact luxury SUV market, with a volume of approximately 240,000 units per year: sales in 2019 and January-October 2020 were 244,000 and 211,000 units respectively, with a CAGR of 5%.

The market for medium-sized civilian SUVs (average landing price of more than 240,000 yuan) has a volume of about 740,000 vehicles per year: sales in 2019 and January-October 2020 were 704,000 and 685,000 respectively.

B-class sedan market (average landing price between RMB 250,000 and RMB 350,000) with a volume of approximately 600,000 units per year: sales in 2019 and January-October 2020 were 598,000 and 525,000 units respectively.

Assuming that the domestically produced Model Y is priced at 339,900 yuan: the target market capacity + potential market capacity is 1.12 million, and the domestically produced MY steady-state annual sales volume is expected to be about 200,000 units.

Assuming the domestic Model Y is priced at RMB 275,000 (after subsidies): the target market capacity + potential market capacity is 1.67 million, and the domestic MY steady-state annual sales volume is expected to be about 360,000 units.

Assuming the domestic Model Y is priced at RMB 255,000 (after subsidies): the target market capacity + potential market capacity is 2.28 million, and the domestic MY steady-state annual sales volume is expected to be about 570,000 units.

It is estimated that the domestic production of Tesla will reach 523,000 vehicles in 2021: in terms of production structure, M3 is expected to reach 278,000 vehicles and MY is expected to reach 245,000 vehicles.

It is expected that domestic Tesla sales will reach 400,000 units in 2021: in terms of sales structure, M3 is expected to reach 180,000 units, MY is expected to reach 220,000 units, and exports are expected to reach 120,000 units.

Tesla is expected to deliver 3.3 million vehicles worldwide in 2025, with Chinese factories contributing 1.2 million, U.S. factories 1.4 million, and European factories 700,000.

It is estimated that the combined global deliveries of Tesla M3 and MY will reach 2.8 million units in 2025, accounting for 85%.

It is estimated that by 2025, global electric vehicle sales will reach approximately 16 million, with a penetration rate of 20%, and Tesla's global market share will reach nearly 21%.

The main components of Model Y include exterior, thermal management system, battery system, electrical appliances, interior, power and chassis, and the supply chain is highly localized.

1. Tesla-LG Chem is the main supplier, and Tesla-CATL is expected to enter

LG Chem has fully entered the Model Y supply chain and has become the current main supplier