The delivery ceremony of the first batch of Tesla MIC Model 3 for mass market will be held at the Shanghai Tesla Gigafactory on January 7. It has only been a year after the Gigafactory 3 began to be built, and tomorrow the first mass deliveries of the MIC Model 3 to consumers begin.
Securities Times reporters recently visited Gigafactory 3. Reporters managed to speak with factory employees who were going to lunch at that time.They told reporters that hundreds of cars were transported every day to local delivery centers. At the factory’s gate, the reporter saw that a large truck with 6 Model 3s was leaving the Tesla factory. Within half an hour while the journalists were there, 36 Model 3 were taken out of the factory.
Tesla China is preparing for the first mass deliveries of domestic Model 3. The number of cars that are exported from the factory during the day should be large.
On January 3, Tesla China announced a reduction in prices for the base version of Model 3. The MIC Model 3 now starts at RMB 299,050 ($42,920), according to the company’s website. As expected, such a decrease in prices entailed an influx of orders.
On January 4, the first morning after the price cuts, about a 100!!! customers made online reservations at the Tesla Shanghai Jinqiao Experience store. And this is only in the morning and only the one day. The line of people who wanted to test drive a car was much larger than usual.
Image source: @ray4tesla/Twitter
Excuse me, how many new orders of the Made-in-China Model 3 per minute?? pic.twitter.com/nJltU6V6L2— Vincent (@vincent13031925) January 6, 2020
Why did Tesla explode market enthusiasm so quickly? According to Tesla's financial report for the third quarter of 2019, Tesla's annual revenue in China reached $ 669 million, an increase of 64% over the year. We can say that China is the market with the highest growth potential for Tesla. According to the plan, by the end of 2020, the level of localization of details of Model 3 will correspond to 100%.
China's manufacturing strength, low labor and manufacturing costs are all important support for Tesla's domestic delivery capabilities.
Based on the assumption that direct costs of raw materials are expected to decrease by 10-20% after for production in China, it is expected that MIC Model 3 will reduce production costs by 20-28% compared to the US version. If the desire for a similar gross margin is similar to the American version (about 19%), the domestic version will have a price reduction of 27% to 34%.
Made in China Tesla has created serious competition for electric vehicles in the Chinese market. It is undeniable that Tesla’s domestic price reduction will have an impact on the new electric vehicle industry, which is largely cost-effective and will even lead to shifts in the industry.
Featured Image Credit: Wuwa Vision/YouTube
About the Author
Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.