China Market situation and outlook

[techmaven]

Well, Tesla geographic breakdown in 2014 was about 55% North America, 30% Europe and 15% Asia with China alone coming in at around 13%. I think the street, from Q4 '14 commentary and various inflammatory articles in the press thought that China sales was near zero, or negative (inventory build that isn't sold).

From the Q4 earnings transcript:

Yes. So even if our sales in China were zero this year, zero, I’m still confident we could do the 55,000 cars

I think expectations from the street wrt Tesla and China are very low and there is an assumption amongst some that there are a slew of stranded Model S's in China still. It doesn't help that Tesla's end of quarter finished assets inventory has been increasing in Q4 '14 and Q1 '15, even if for other reasons.

Therefore, even a steady 4,000 annual rate of sales in China matching 2014 is pretty good for Tesla right now as most of the growth this year is expected to be in North America. The "D" Model S variants are going to hit right hand drive markets this fall and that will help maintain or grow the Model S demand somewhat, but most of the Model X initial sales will be in North America. That also helps the company financially right now from a FX perspective as they buy the battery cells in yen and if they sell more to North America than Europe, they make more margin.

 

[SteveG3]

Well, Tesla geographic breakdown in 2014 was about 55% North America, 30% Europe and 15% Asia with China alone coming in at around 13%. I think the street, from Q4 '14 commentary and various inflammatory articles in the press thought that China sales was near zero, or negative (inventory build that isn't sold).

From the Q4 earnings transcript:


I think expectations from the street wrt Tesla and China are very low and there is an assumption amongst some that there are a slew of stranded Model S's in China still. It doesn't help that Tesla's end of quarter finished assets inventory has been increasing in Q4 '14 and Q1 '15, even if for other reasons.

Therefore, even a steady 4,000 annual rate of sales in China matching 2014 is pretty good for Tesla right now as most of the growth this year is expected to be in North America. The "D" Model S variants are going to hit right hand drive markets this fall and that will help maintain or grow the Model S demand somewhat, but most of the Model X initial sales will be in North America. That also helps the company financially right now from a FX perspective as they buy the battery cells in yen and if they sell more to North America than Europe, they make more margin.

Techmaven, great points about repeatedly reported on inventories in China and unavailability of "D" in China for the almost all of the year contributing to sentiment that matching 2014 sales in China would not be a disappointment at this point to anyone whose been paying attention.

 

[Lump]

Ex General Motors Company Executive to Join Tesla Motors Inc for China Turnaround - Smarter Analyst

 

[electracity]

The Model X will be a meaningful test of how well Tesla understands the China luxury market. I notice increasing emphasis on rear seat features of cars like the new BMW 7. Capturing the interest of the town car buyer (for lack of a better term) in a few major Chinese cities would by itself allow Tesla to grow sales in that country.

The Japanese and the Koreans had to be patient entering the U.S. auto market. Some of Tesla's major markets may take years to develop. If they had good sales in most major markets they couldn't make enough cars to meet demand over the next two years.

I agree that the early projections in China mean nothing. There should be the expectation of moderate sales growth, considering the effort. We will see if the Model X "pops" in that market.

 

[AudubonB]

News of that ex-GM exec and current Deputy Gov'r of a (very small) area is very interesting. I hope some of our China-located members can learn more and post about Mr. Ding Lei.

 

[Blip]

(deleted/moved to other thread)

 

[drinkerofkoolaid]

New information about the charging standard will be released soon. 新国标充电桩æ¥è¢­ å†ä¹Ÿä¸ç”¨æ‹…心特斯拉的续航_TechWeb

 

[ScepticMatt]

Well they said that for a while. But they promised to finalize it in August. For real this time.

 

[RobStark]

Tesla Takes Big Lead in China’s Green Vehicle Market

Company has more than 80% of segment for imported plug-in hybrid, electric cars

By JEFF BENNETT

Updated Aug. 5, 2015 3:44 p.m. ET

Tesla Motors Inc. is dominating China’s “new energy” vehicle market, grabbing more than 80% of the segment for imported plug-in hybrid or electric cars, according to a Chinese auto research group Wednesday.

In a rare snapshot of Tesla’s operations in China, the China Automotive Technology and Research Center said at an industry conference that 2,147 of the 2,645 green vehicles shipped to China and sold in the country during the first half were Tesla vehicles.

http://www.wsj.com/articles/tesla-take-big-lead-in-chinas-green-vehicle-market-1438803074

 

[hobbes]

Was just going to post just that article right here - you beat me . Finally good news from China, although nowhere near what Tesla expected intially. But still the trend is up it seems.

Tesla Takes Big Lead in China’s Green Vehicle Market

Company has more than 80% of segment for imported plug-in hybrid, electric cars

By JEFF BENNETT

Updated Aug. 5, 2015 3:44 p.m. ET

Tesla Motors Inc. is dominating China’s “new energy” vehicle market, grabbing more than 80% of the segment for imported plug-in hybrid or electric cars, according to a Chinese auto research group Wednesday.

In a rare snapshot of Tesla’s operations in China, the China Automotive Technology and Research Center said at an industry conference that 2,147 of the 2,645 green vehicles shipped to China and sold in the country during the first half were Tesla vehicles.

http://www.wsj.com/articles/tesla-take-big-lead-in-chinas-green-vehicle-market-1438803074

 

[maoing]

China auto sales slump to 17-month low despite price cuts

China steps up currency war with dramatic renminbi devaluation

Both doesn't bode well for China market.

 

[RobStark]

maoing,

Is Chinese currency called Yuan or Renminbi or what is the difference?

 

[Lump]

2Q Shareholder letter had this...

Finally in Asia, Q2 Model S orders nearly doubledfrom last quarter, helped by the initial success of our revisedChina strategy. Given this improvement, we are increasing ourinvestments in China by planning to grow this year from one tofive retail stores located in high foot traffic areas.

But during the CC I don't recall China being mentioned so I guess this revised strategy is going to work out great even though their stock markets had already started a sharp correction & most company shares were halted.

 

[maoing]

It's like dollar and buck.

maoing,

Is Chinese currency called Yuan or Renminbi or what is the difference?

 

[Matias]

China made an other devaluation.

 

[ScepticMatt]

Is Chinese currency called Yuan or Renminbi or what is the difference?

From my limited understanding:
Renminbi is the name of the currency. Yuan is a measure word for money, like ben is for volumes of books. It means "round coin".
In China "Yuan" is also used for Japanese or Korean currencies, or translated currencies like Meiyuan for US Dollar and Ouyuan for Euro.
The equivalent to "buck" would be kuài, literally "lump, piece".

 

[maoing]

Tesla to open 4 new stores in China by end of 2015
http://news.xinhuanet.com/local/2015-08/07/c_128101345.htm

Two of them will be opened this week in Shanghai and Hangzhou. Both in pretty expensive CBD.
http://club.autohome.com.cn/bbs/thread-c-2357-44323166-1.html

 

[hobbes]

Tesla to open 4 new stores in China by end of 2015
http://news.xinhuanet.com/local/2015-08/07/c_128101345.htm

Two of them will be opened this week in Shanghai and Hangzhou. Both in pretty expensive CBD.
http://club.autohome.com.cn/bbs/thread-c-2357-44323166-1.html

Cool, thanks for the info. Do you think this might be a sign that Tesla is more confident again in being able to increase sales in China after working on the charging infrastructure?

 

[drinkerofkoolaid]

Based on my observations and discussions with people who know people in China who own a Model S, people are significantly underestimating the situation in China. Demand is extremely high. Tesla is working with the Chinese government and utilities to make sure it's vehicles are fully compatible with the standard, are completely safe to use, and follow the rules in place to qualify for incentives that will be announced soon. BMW has been subject to a lot of scrutiny in China, but still made the list. I will be very surprised if Tesla doesn't make the list, unless the Model S and Model X are intentionally being kept off, to further increase demand for the Model 3.

Tesla's Ambitious Quest for Traction in China

 

[maoing]

Btw. Two unofficial "news" for Tesla in China.
1. Tesla will get free license plate in Beijing by end of August;
2. China fast charging standard won't be compatible with Tesla super charging. So Tesla need to modify the spec. to fit China standard. It'll have temporary hit to the Sales in China.