Good observation - the physics already pointed that way, hopefully the politics will too.
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http://club.autohome.com.cn/bbs/thread-c-2357-49006264-1.html
In this post, the buyer got 8K RMB incentive from referral program and 80K RMB incentive from ICE car replacement program. So total incentive is 88K RMB (1 USB = 6.6 RMB), which is approximately USD 13.3K. Tesla must had given up more than 10% GM to lure Chinese buyers. I think the delivery # to China will surge in Q1.
Edits: buyer got 88K RMB incentive, the referrer should get 8K RMB too. So the total incentive package for a model S sale is 96K RMB ~= 14.5K USD, I guss the 70D will be sold without margin for this case. Plus all major citys give greenlight for free EV license plate and no EVEN/ODD plate number restriction for EV. There is no doubt China order # surged in Q4 and will be reflected in Q1 delivery report. At this point, I wouldn't worry too much about low GM, the demand growth and sale # is the high priority.
Btw, for ICE car trade-in incentive. The buyer got the value of trade-in at first and Tesla gives another 80K RMB incentive as the Model S price cut.
In this post, the buyer got 8K RMB incentive from referral program and 80K RMB incentive from ICE car replacement program. So total incentive is 88K RMB (1 USB = 6.6 RMB), which is approximately USD 13.3K. Tesla must had given up more than 10% GM to lure Chinese buyers. I think the delivery # to China will surge in Q1.
Edits: buyer got 88K RMB incentive, the referrer should get 8K RMB too. So the total incentive package for a model S sale is 96K RMB ~= 14.5K USD, I guss the 70D will be sold without margin for this case. Plus all major citys give greenlight for free EV license plate and no EVEN/ODD plate number restriction for EV. There is no doubt China order # surged in Q4 and will be reflected in Q1 delivery report. At this point, I wouldn't worry too much about low GM, the demand growth and sale # is the high priority.
Btw, for ICE car trade-in incentive. The buyer got the value of trade-in at first and Tesla gives another 80K RMB incentive as the Model S price cut.
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RobStark
Well-Known Member
So Tesla is giving a $1200 referral incentive in China.
Tesla was,at least until recently, giving a 1k British Pound incentive in the UK or $1500.
Taking a car in as trade-in is not an incentive.
Tesla was,at least until recently, giving a 1k British Pound incentive in the UK or $1500.
Taking a car in as trade-in is not an incentive.
If Tesla can accomodate GB charging standard, charging won't be an issue. China is the only government pushing EV so hard (give tons of incentives to domestic plug-in) and will build charging network throughout the country. Tesla was the pioneer in EV and met many headwinds in China, but in long run it'll get huge benefits.
I wonder how long will it take for this perpetuating misunderstanding and misquoting of Tesla discount in China to be understood.
Thanks for your patience Rob.
For some people still live in their imagination. In the link http://club.autohome.com.cn/bbs/thread-c-2357-49006264-1.html, there are two pictures in OP. The 2nd one gives the orignal pice (deduct 8K) but without ICE car replacement incentive. The p90D price is 1,223,400 RMB. In the first picture, the final price after 80K incentive is 1,143,400 RMB.
I'm sure Tesla will mention this in the 2016 Chinese New Year address, but here is the latest update I could find (January 14, 2016).
Google Translate said:
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stopcrazypp
Well-Known Member
Some of your claims conflict each other. You are trying to use this post as evidence that somehow Tesla is making zero margin (or close) on the Model S in China to boost sales. However, your example is a P90D, not a 70D. The original trade-in incentive announcement said that the value varies depending on the model you order. So a 70D will not have a 80k incentive.
Then you mix in the referral credit, which is independent of that. This referral credit is offered all around the world already and is offset by reduced sales costs at Tesla stores.
If you look at the post, the final car after subtracting customs fees, his 15k RMB deposit, and all incentives is 878.4k RMB. This is 133.8k USD even at the current unfavorable exchange rates. I doubt Tesla is anywhere close to losing all their margin at that price.
For reference, their Q3 2015 automotive gross margin was 26%, YTD as of Q3 2015 was 27%. A fairly loaded P90D like the one above (he only skipped out on ludicrous and the cold weather package) is likely to have higher margins than the average.
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jesselivenomore
Member
First of all, the program is for an incentive UP TO 80k RMB, not flat 80k for every ICE trade in.
Second, trade in and used car sales are one of the major profit centers for dealers. In the US dealers can make 20%+ on a trade in at book value and sale at suggested retail. I am pretty sure in China the profit margin is even higher.
Tesla is not taking in used ICE as a charity. It is for profit. So if anything, the 80k incentive could eat into the trade-in profit margin. Not the margin on new car sales.
Even in the link that maoing just posted, the trade-in value for his ICE was 265k RMB. And the individual was asked why he got so little for his trade in. His response was that there is an additional 80k off.
Second, trade in and used car sales are one of the major profit centers for dealers. In the US dealers can make 20%+ on a trade in at book value and sale at suggested retail. I am pretty sure in China the profit margin is even higher.
Tesla is not taking in used ICE as a charity. It is for profit. So if anything, the 80k incentive could eat into the trade-in profit margin. Not the margin on new car sales.
Even in the link that maoing just posted, the trade-in value for his ICE was 265k RMB. And the individual was asked why he got so little for his trade in. His response was that there is an additional 80k off.
265K RMB is the deposit, not the trade-in value. I think many folks are sensitive to GM now, but I believe high sales volume is much more important than high margin at this point. China market is huge to Tesla, go check the EV growth and BYD growth rate in 2015.
stopcrazypp
Well-Known Member
That is not correct either. 15k RMB is the deposit. 250k are the customs fees. Total 265k RMB is due before the car goes through customs (which the poster paid for already). I believe he is trying to transfer this order to someone else and there were questions asked about if the trade-in incentive is also transferable, depending on when the credit is applied. It seems he had traded in his car already, so he got the incentive applied already. No details posted on what car was traded in and price, so as others posted, Tesla may have a had margin on that transaction, given Tesla traditionally gives very low trade-in values.
That 878.4k RMB includes a 17% VAT that doesn't get in to the coffer of Tesla. So effectively, Tesla got about $108k for this sale. Tesla gets $120.7k for a same car sold in US (I added the destination and doc fee). Assuming the P90D has 30% GM, cost of making it is $92.8k. Tesla was making about 16% GM for this car during the one and a half month long discount period in China last year. Given the discount for other models are less than 80k RMB, I would assume the GM for cars sold in China over this discount period should be around 12%-16%, or about half of the GM for cars sold elsewhere without this discount. All of above didn't take into account the devaluation of RMB recently, which shall take another 3% off, making the GM for those cars in the low teens.
stopcrazypp
Well-Known Member
Even with so much stuff taken out, it's still not anywhere close to zero (my math actually is based on current exchange rate). I suspect the story is similar with any 70D with the credit scaled down. If I remember correctly this only last to year end, so it's already over anyways.
You are correct on both counts, I popped into the Chengdu shop just before Christmas to see if they had any expectations on MX arrival in China and they said probably not till much later than their original estimate they had given me in October. On seeing my dissapointment, they had a very spirited go at pushing me into buying either a an S85 tester or a new 70D. They were prepared to offer a discount of 50,000 Renminbi as long as I ordered before Jan 1st when the deal ended.
To be honest my wife was prepared to go for the deal rather than wait another year for our X but given the smog levels here, I want that big HEPA filter!
First model X arriving Shanghai by air shipping. It sounds like a demo car. If so, tesla has high expectation for model X sales in China where is the biggest market for porche SUV
ä¸*国第一辆Model Xå·²ç»åˆ°æ¸¯_MODEL S论å›_手机汽车之家
ä¸*国第一辆Model Xå·²ç»åˆ°æ¸¯_MODEL S论å›_手机汽车之家
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