On January 7th, 2020, Tesla had already begun bulk delivery of the Chinese-made model 3 with the annoucement of around 32,000.00 yuan(6000$) price cut for the home-made model which start start at 355,800 yuan ($50,800). Needleess to say, the move will lure buyers as the world’s biggest electric-vehicle market slows. Tesla Model 3 is very promising to be a most popular new energy model in China.
Tesla aims to lower costs by using more local components, allowing it to import fewer parts and avoid tariffs. On a home-made Model 3 delivery conference a chief executive said that the current localization rate for off-line automotive component is 30% currently, and it is expected to reach 70% in the middle of the year and 100%t by the end of the year, laying the foundation for continued cost down. Also this strategy brings a lot of opportunities to domestic upstream and downstream vehicles part suppliers.
The cut is widely predicted as just a start among the industry. There is a very important note shown on Tesla’s Q3 report: the production cost of Shanghai’s Model 3 production line is 65% lower than that in the US. The starting 16% cut in China-built Model 3 suggests that Tesla still has room for further scale of price cut.
Tesla supply chain lineup is very luxurious, including powertrain system, electric drive system, charging, chassis, body, central control system, interior and exterior decoration and other parts, involving more than 130 direct and indirect suppliers, while Chinese enterprises occupy half of the line.