Demand for Tesla’s MIC Model 3 could spike this quarter as local government’s in China try to stimulate the economy by incentivizing new-energy vehicle (NEV) sales. Multiple local governments in China have started to roll out subsidy programs to encourage NEV vehicles. Tesla’s demand in China has been impressive thus far. These recent developments could continue and even increase demand for Giga Shanghai’s Model 3. 

Tesla enthusiast Ray4Tesla shared some screenshots from local Chinese media that support reports of local governments NEV subsidy programs. For instance, the Hainan Province is offering a “comprehensive reward” of RMB¥10,000 to anyone who purchases a new energy vehicle and registers it in the local vehicle management department. 

Local Chinese media reported that consumers would receive RMB¥10,000 for each new energy vehicle they purchase and register in the Hainan Province. The subsidy program in Hainan is effective from May 1 to July 2020. 

To stimulate the economy, many local governments in China are starting to roll out subsidy programs for NEV vehicles. Expect to see EV sales jump in the second half of 2020. Similar thing happened in 2003 and passenger vehicle sales was up after SARS outbreak was over. Go green! pic.twitter.com/0WiYXACjmb

— Ray4️⃣Tesla⚡️🚘☀️🔋 (@ray4tesla) May 1, 2020

The support for NEV vehicles plus the recently decreased price tag of the MIC Model 3 SR+ could result in a spike in demand for Q2 2020. Some investors and analysts have wondered how Tesla will perform during the second quarter of 2020, especially if Fremont factory’s shutdown continues. 

However, a spike in demand for the MIC Model 3 SR+ may be enough to help Tesla pull through and continue to deliver good numbers. Giga Shanghai has also started producing the Model 3 Long Range RWD and expects to deliver those units by June. If Giga Shanghai pushes Long Range deliveries before Q2 2020 ends, Tesla could see a stable quarter this year. 

Other local governments have already taken steps to encourage consumers to purchase battery energy vehicles (BEVs) or NEV vehicles. For example, Beijing increased its BEV license quota in March, giving more consumers a chance to register for an official license place. 

Tesla China Announced New Model 3 SR+ Pricing for New NEV Subsidy Regulations https://t.co/bOROdwWDwV

— Tesmanian.com (@Tesmanian_com) May 1, 2020

At the national level, the Chinese government released new NEV subsidy regulations. The national government also plans to spend RMB¥10 billion on the construction of BEV charging stations in the country. 

Growing support for new-energy vehicles in China bodes well for Tesla and its Giga Shanghai facility in the country. Tesla China sales were partly credited for the company’s impressive gross margins in Q1 2020. Giga Shanghai could help Tesla remain profitable in the second quarter as well. 

Featured Image Credit: Tesla