Musk plans to attend a ceremony to mark the first deliveries of made-in-China
Tesla Inc. vehicles to customers on Tuesday, according to people familiar with
which is already churning out more than 1,000 Model 3 sedans a week at its
plant on the outskirts of Shanghai, handed over a batch of cars to a select
group of employees on Dec. 30, but Tuesday marks the first deliveries to the
general public. The ceremony is due to start at 3 p.m. local time at Tesla’s
first factory outside the U.S., a milestone in Musk’s plans for the company he
founded to go global.
it comes at a challenging time in China’s auto market, where forecasts point to
a third-straight annual drop in total sales. Electric vehicle sales plunged 42%
in November from a year earlier as the government pared back subsidies on
purchases. In a bid to lure buyers, Tesla cut the starting price of its
China-build Model 3 sedans by 9% so that they’ll be more closely aligned to
some local EV makers. It may cut prices further mid-year as it increases
localization of components, people familiar with the matter have said.
capturing about 5% of China’s car sales, the slowdown for electric vehicles
could spell trouble for a launch that investors are watching closely for
evidence that Tesla has what it takes to go global. A slow start for sales of
its made-in-China cars would put more pressure on the unprofitable
manufacturer’s finances, giving Musk little room for missteps to support a
stock that’s hovering at an all-time high.
and his team are looking at a market that’s very different from mid-2018 when
the decision to build a Shanghai plant was announced. Back then, the industry’s
sales were growing at a roughly 100% clip.
tough market could mean that Tesla sells just 21,000 China-built Model 3s this
year, according to LMC Automotive. That would qualify as a sluggish start given
the Shanghai facility already builds more than 1,000 cars a week and plans to
double production during the next year.
others are more optimistic. Yale Zhang, managing director of Shanghai-based
consultancy AutoForesight, said Tesla could sell about 100,000 Model 3 cars.
Wang Lei, a Shanghai-based analyst for China International Capital Corp., said
Tesla could sell a combined 120,000 Model 3 and Model Y vehicles.
in boosting China sales could propel Tesla to as high as $500 a share, a Morgan
Stanley analyst, Adam Jonas, said in a December note to clients. Tesla climbed
to a record of $443.01 on Friday after rising 26% last year. Analysts expect
the stock to fetch $311.41 in 12 months, based on 31 target prices compiled by
far, the China project has gone smoothly. Musk’s visits helped the company get
preferential bank loans and swift approvals for construction and manufacturing.
And while the subsidies are being phased out, the locally built Model 3 still
qualified for a sizable handout of as much as about $3,550 per car.
Tesla, a pioneer in electric cars, probably will have an edge for the next one-to-two years before the competition starts catching up, said David Whiston, an analyst at Morningstar Inc. in Chicago. Tesla’s vehicles have an industry-leading driving range to go along with the brand appeal.
well for the company, registrations of Tesla vehicles in China rose 14-fold to
5,597 in November. While growing from a low base, the figure suggests healthy
demand for its cars even though all the models available thus far have been the
pricier imported versions of the Model 3, and the higher-end Model S sedan and
Model X SUV.
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