Tag Archives: Tesla

Tesla latest financial news

New Tesla Plant to Charge Up China’s Electric Car Market? Not So Fast

Bottom line: Cars from Tesla’s Shanghai Gigafactory could pose a short-term challenge to luxury brands like Audi and BMW, and could help to revive the nation’s flagging NEV market longer-term if they move into more affordable terrain.

Tesla charges into China with new factory

This week I’m taking a few steps outside my usual comfort zone and exploring the high-tech realm of new-energy vehicles with a closer look at global superstar Tesla Inc. (Nasdaq: TSLA) I’ve actually followed this company’s drive into the world’s biggest car market for some time, starting with its earliest days when it tangled with a squatter who registered Tesla’s Chinese name.

I’ll review some of Tesla’s earlier bumpy road into China shortly. But I’ll spend the bulk of this piece looking at Tesla’s relationship with China’s currently sputtering broader new-energy vehicle market as it prepares to open a new chapter in its love affair with the world’s most populous nation.

The company has been in the news nearly nonstop here for much of the last year, as it prepares to open the first production base outside the U.S. for its pricey but high-performance electric cars. In this case the plant is in Shanghai, and will start cranking out lower-end versions of Tesla’s mainstay Model 3 sedans at the start of next year. Even the most basic Model 3 model isn’t exactly cheap, with a price tag of 355,800 yuan, or roughly $50,000.

The company made headlines this week when it announced that the China-made Model 3 cars would be eligible for local subsidies, unlike other Teslas that have been sold in the country so far, which have all been imported from the U.S. Such subsidies were quite generous when China was trying to supercharge sales to promote the industry’s development. But they’ve been sharply rolled back this year, and Tesla buyers in China will have to settle for a modest subsidy of up to 25,000 yuan, equating to a relatively modest discount of about 7%.

The much bigger back story here is that China’s electric vehicle market has lost direction since the middle of this year, when most of the generous subsidies for both manufacturers and buyers were canceled. China took the drastic action after earlier subsidies were heavily abused by companies looking to pocket government money, either by pumping out large volumes of very low-quality cars or exaggerating their sales figures.

The latest stats are telling: sales of the vehicles plunged 46% year-on-year in October to just 75,000, following a 34% dive in September. Industry bellwether BYD Co. Ltd., one of the largest domestic manufacturers, posted an even larger 63% decline in November sales.

What’s more, the vast majority of purchases now come from big fleet owners, such as taxi and bus operators. A top executive at General Motors Co.’s main Shanghai joint venture recently estimated that of the 900,000 NEVs sold in the first nine months of this year, just 100,000 were purchased by ordinary mass-market consumers. That’s important because to really succeed in China, NEV makers will ultimately have to convince mass market consumers to buy their products rather than rely on government-linked entities whose decisions often cater to the latest party line.

Tesla to the Rescue?

Amid all the clutter of names like BYD and BAIC Motor Corp Ltd., which rely heavily on such politically-motivated buying, Tesla stands out as a stark exception. Before starting to set up its Shanghai plant, Tesla had no real local backing due to its status as an importer that didn’t bring any major economic benefits to local governments or businesses.

Thus its sales to date have been almost all commercially driven, and most of its customers have been status-conscious consumers willing to pay prices mostly associated with luxury brands like BMW and Audi. I can personally testify that Teslas are a relatively common sight here on the streets of Beijing, and that the cars enjoy a high degree of status and brand recognition among the upwardly mobile Chinese who will be needed to help the company succeed.

That image has been built gradually over the last five years, and has definitely gone through some ups and downs in that time. As I mentioned earlier, the ride was initially bumpy due to a trademark row that was ultimately settled in August 2014. Around that time, Tesla’s founder Elon Musk wowed China by personally visiting the country to launch its first vehicles.

Tesla has encountered another few speed bumps since, including a handful of scandals involving car accidents and some strategy and personnel adjustments in the early years. But at this point, the company does appear to be hitting on all cylinders, so to speak, with its China revenue surging 64% in this year’s third quarter to $669 million – just over 10% of its total for the period.

I talked with a couple of analysts to gauge what the company’s future may hold, with rollout of its China-made Model 3 cars coming in January. Both agreed the company is unlikely to single-handedly recharge the struggling new-energy vehicle market right away, especially since its higher-priced cars don’t really compete with most domestic players. Instead, it’s luxury car makers like BMW and Audi that could feel a slight pinch if and when higher-end Chinese buyers decide to test out the trendier and certainly more politically correct Tesla brand.

One analyst pointed out that Tesla is likely to take a top-down strategy, aiming first at higher-end buyers and then moving to middle-end ones over the next few years as the market and technology mature. He predicted Tesla could roll out one or more models next year priced in the 200,000-plus yuan range, which would mark an important inroad to mid-market affordability at the equivalent of the $30,000-plus range.

The company certainly has the capacity to crank out lots of such mid-priced cars, since the Shanghai plant alone is designed to eventually produce up to 500,000 vehicles per year.

With all that infrastructure and brand recognition in place, not to mention government goodwill following the Shanghai plant opening, the market could well become a major growth engine for Tesla if it doesn’t make any major missteps. That means names like BMW and Audi should watch out in the short term, and that over the longer term Tesla could provide a significant boost to lift China’s struggling new-energy vehicle market out of its current doldrums.

IPOs: EV Maker Nio Sputters Out of the Gate With Weak Pricing

Bottom line: Nio’s shares are likely to debut flat to down slightly in a lackluster New York trading debut, capping an IPO process pockmarked by investor skepticism.

Investors fail to charge Nio IPO

Wall Street investors will get a taste of a new flavor of Chinese company very soon, when homegrown electric vehicle maker Nio makes its trading debut on Wednesday. But based on all the signals so far, this offering for a company that some have likened to China’s answer to Tesla (Nasdaq: TSLA) could be a major flop. That would be somewhat appropriate given all of the real Tesla’s current woes, which point to the difficulties of building up a major new car maker from scratch.

Nio’s road to New York has been pockmarked with negative signposts pretty much all of the way. The latest of those has media reporting the company has priced its IPO American depositary shares (ADSs) at the very bottom of their range, at a price of $6.25 apiece, raising a total of $1 billion. (English article) That compares with an initial target of up to $1.8 billion, and I’ve heard that even that figure was trimmed back from initial hopes of more like $2 billion. (English article) Read Full Post…

NEW ENERGY: Tesla Takes Its Time With China Plant

Bottom line: Tesla’s announcement that its China plant is three years away puts a clear and realistic timeline on its intentions, which include strong growth in the market banking on supportive policies by Beijing.

Tesla gets realistic about China car production

Anyone who was hoping that electric car superstar Tesla (Nasdaq: TSLA) would start cranking out its products in China anytime soon will have to think again. Founder and celebrity CEO Elon Musk has poured cold water on all the speculation about his company imminently building a China manufacturing base by saying local production is at least 3 years off. That’s just a single data point, but it’s quite a significant one considering all the talk that’s been swirling around these days.

That talk dates back a couple of years, when reports first emerged that Tesla  was interested in such a move. One of the stumbling blocks all along has been the ownership issue, since China now limits foreign ownership of any car-making joint venture to 50 percent. But that looks set to change, which had fueled speculation that Tesla would step on the gas pedal once it got the green light, pardon all the car metaphors. Read Full Post…

NEW ENERGY: Tesla EV Plan Lands in Shanghai — Again

Bottom line: Tesla is likely to announce a new $9 billion electric car joint venture in Shanghai within the next two months, which could begin production as the industry starts to gain traction in the next 1-2 years.

Tesla on cusp of electric car JV

Almost a year to the day after media reported an imminent deal that would see electric car maker Tesla (Nasdaq: TSLA) set up a plant in Shanghai, new reports are emerging saying the long delayed deal will finally be announced. Anyone sensing a bit of “boy who cried wolf” with the latest reports is probably justified in feeling slightly skeptical. But I would quickly add this time perhaps we could finally see an announcement. It may not be as imminent as the reports are indicating, but perhaps within the next month or two.

Anyhow who feels compelled can go back and look at the reports a year ago, at which time I also predicted an announcement could be coming in the next month or two. (previous post) I tend to probably believe such reports a bit too much, mostly because China is a famously leaky place for such news. But that leakiness means that talks for deals often get out when they’re still in the relatively early stages, whereas in the west most such leaks don’t occur until the deal is nearly done. Read Full Post…

INTERNET: Tencent in High-Powered Mapping Investment with Europe’s Here

Bottom line: Tencent’s new investment in Nokia’s former mapping unit Here reflects the Chinese herd mentality to pile into new technologies, but also looks like a relatively savvy way to enter the space by pairing with experienced partners.

Tencent ties with mapping giant Here

Internet giant Tencent (HKEx: 700) doesn’t want to be left behind in the race with rivals Baidu (Nasdaq: BIDU) and Alibaba (NYSE: BABA) into self-driving new energy cars that may someday dominate the streets of both China and the world. That appears to be the message from the latest headlines, which have Tencent involved in a somewhat complicated deal that will give it a small stake in a high-powered mapping company that counts car giants BMW, Daimler and Audi as its main investors. Read Full Post…

NEW ENERGY: Tesla Takes New China Hit with Driver Death Lawsuit

Bottom line: A Beijing lawsuit against Tesla over an accident that killed the driver of one of its cars is quite possibly baseless, but will add to a recent string of negative publicity for the company and China’s problem-plagued new energy vehicle sector.

Tesla sued over driver death in China

Electric car maker Tesla (Nasdaq: TLSA) is in the negative headlines in China driving into the new week, following reports of a Beijing lawsuit against the company over the death of a driver of one of its cars. I’ll be quite direct and say that the lawsuit looks a bit dubious and perhaps unrelated to Tesla’s technology, though it’s also possible that Tesla’s carefully worded statement is designed to give that impression. But even if the lawsuit is baseless, this kind of negative headline is the last thing that Tesla needs in a problem-plagued market that it once hoped would fuel its difficult drive into profitability. Read Full Post…

China News Digest: September 15-19, 2016

The following press releases and news reports about China companies were carried on September 15-19. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════

  • WuMart Joins Bidding for China McDonald’s (NYSE: MCD), 3 Groups Submit Bids (Chinese article)
  • PayPal (Nasdaq: PYPL) Reaches Deeper Into China With UnionPay Partnership (English article)
  • Tesla (Nasdaq: TSLA) Investigates Potential Autopilot Link in Fatal China Crash (English article)
  • China or India Next on Pokemon Go Roadmap – Reports (Chinese article)
  • Mengniu (HKEx: 2319) Unexpected Changes Chief, Danone (Paris: DANO) Plays Bigger Role (Chinese article)

China News Digest: August 6-8, 2016

The following press releases and news reports about China companies were carried on August 6-8. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════

  • Chinese Buyer Purchases UK Premier League Soccer Club West Bromwich Albion (Chinese article)
  • Apple (Nasdaq: AAPL) Removes Toutiao News App From China Store (Chinese article)
  • E-House (NYSE: EJ) Announces Shareholder Approval of Merger Agreement (PRNewswire)
  • Ele.me Threatens Merchants with Removal for Failure to Pay Technology Fee (Chinese article)
  • Tesla (Nasdaq: TSLA) EV Owner Reports First China Accident Using Self-Drive Mode (Chinese article)
  • Latest calendar for Q2 earnings reports (Earnings calendar)

NEW ENERGY: Tesla Closes in on China Plant, Shanghai in Sight?

Bottom line: Tesla will announce a joint venture production facility in Shanghai within the next 1-2 months, and could see its China sales pick up sharply after its more affordable Model 3 reaches the market next year.

Telsa eyeing China home in Shanghai?
Telsa eyeing China home in Shanghai?

Just a week after Disney (NYSE: DIS) launched its newest theme park in Shanghai, media are saying that new energy car superstar Tesla (Nasdaq: TSLA) is also eyeing China’s commercial capital as the location for a new production base costing up to $9 billion. We should note from the start that the potential partner mentioned in the reports, the Shanghai government-owned Jinqiao Group, has denied the signing of a memorandum of understanding (MOU) for such a deal. But in this case I trust the source of the story, Bloomberg, more than the Chinese officials who have a track record of denying reports that later turn out to be true. Read Full Post…

China News Digest: June 22, 2016

The following press releases and news reports about China companies were carried on June 22. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════

  • Tencent (HKEx: 700) Buys ‘Clash of Clans’ Maker Supercell for $8.6 Bln (English article)
  • Lenovo (HKEx: 992) Invests in LeEco (Shenzhen: 300104) Super Car Business – Report (Chinese article)
  • Tesla (Nasdaq: TSLA) Eyes Shanghai as Front-Runner for China Production (English article)
  • China Will Allow Foreign Firms to Issue Shares on Mainland: Central Bank (English article)
  • CDB Leasing Attracts Three Gorges, China Re to $978 Mln IPO (English article)

China News Digest: May 25, 2016

The following press releases and news reports about China companies were carried on May 25. To view a full article or story, click on the link next to the headline.
══════════════════════════════════════════════

  • Tencent (HKEx: 700) in Talks to Buy Supercell Stake From SoftBank, WSJ Says (English article)
  • Huawei Sues Samsung (Seoul: 005930), Demands Royalties on Phone and Tablet Tech (English article)
  • Chinese Billionaire Chen’s Shanda Buys 11.7 Pct of LendingClub (NYSE: LC) (English article)
  • Tesla (Nasdaq: TSLA) May Push Back Plan for China Manufacturing (Chinese article)
  • Baidu-Affiliated (Nasdaq: BIDU) iQiyi Plans Backdoor A-Share Listing Next Year (Chinese article)