Featured Image Credit: Wuwa Vision/YouTube
Tesla Gigafactory Shanghai's MIC Model 3 may have raked in 15,000 orders in April, mostly for the Long Range RWD variant. The Long Range variant seems to have shifted the demand away from the MIC Model 3 SR+ despite its reduced price.
According to Chinese media researcher @DKurac, Model 3 SR+ sales were low in April because many customers are waiting for its price to drop down even further. Tesla reduced the price of the MIC SR+ shortly after its Q1 2020 Earnings Call.
TSLA CFO Zachary Kirkhorn indicated that Giga Shanghai vehicle prices could drop further as demand increases, and Giga Shanghai's supply chain is localized even further.
"The cost of vehicles produced in Shanghai in Q1 is already lower than the cost to produce the Model 3 in Fremont, and there's still significant opportunity left to take costs out. So fixed cost absorption from higher production volumes, which are occurring in Q2 and will occur through the rest of the year, were not fully localized on the supply chain yet," said Kirkhorn during the Earnings Call.
Tesla received close to 15K orders in Apr, most of them were M3 LR, China media reports without naming sources.— Moneyball (@DKurac) May 25, 2020
Apr sales low as SR customers decided to wait for price cut, while LR was not being produced yet. SRs produced in Apr expected to be sold this month, report concluded. pic.twitter.com/tkxgOCZAq5
"And so while a lot of the supply chain is localized, it's not complete, and there's additional opportunities there. And so we'll continue to bring the price down and expand margin -- costs down and expand margin even with this reduction in price that Elon mentioned on the standard range version of the vehicle."
On the other hand, it appears that demand for Giga Shanghai's Model 3 Long Range RWD has picked up the slack from reduced SR+ sales. Giga Shanghai started delivering Long Range RWD variants to reservation schedules ahead of schedule, which bodes well for Q2 2020.
At the rate that Giga Shanghai is moving, the MIC Model 3 Performance could be ahead of schedule as well by at least a few weeks, similar to the MIC Model 3 LR RWD. MIC Model 3 Performance deliveries were expected to start in Q1 2021.
Tesla China VP Grace Tao also predicted that Giga Shanghai could start MIC Model Y production by Q1 2021. She shared with local media that Tesla's Shanghai factory could reach 4,000 a week production by the end of June 2020.
Given Giga Shanghai's rate of production and the Fremont factory's reopening, Tesla could meet its 2020 guidance and produce 500,000 vehicles before the end of the year. However, as Gene Munster pointed out in an interview, the ultimate metric that will decide if Tesla was profitable in 2020 would be its deliveries.Follow @PurplePanda88
About the Author
Ma. Claribelle Deveza
Longtime writer and news/book editor. Writing about Tesla allows me to contribute something good to the world, while doing something I love.