Tesla's secondary catfish effect is coming, double factory + million production capacity, can the price of the car be reduced?

When Tesla built its first factory in Shanghai in 2019, it was known as the "catfish" of the new energy market.

In 2022, when Tesla intends to build a second factory in Shanghai, it may be a bigger "catfish", the second factory is expected to have an annual production capacity of 450,000 vehicles, or the production of Model 3 and Model Y, after the completion of the two factories is expected to reach an annual production capacity of 1 million.

In short, the "catfish" will become larger and larger, and the competition in the new energy market will become more and more fierce; with competition, there will be excellent enterprises and products. So, tesla's second factory in Shanghai, what impact will it have on the entire new energy vehicle market?

Why not other cities, but also choose Shanghai?

In 2021, Tesla delivered nearly 940,000 vehicles worldwide, nearly half of which were produced in Shanghai, and the annual production capacity of the Shanghai plant will be about 484,000 units in 2021. In the BEV era, Shanghai has an insurmountable supply chain advantage, and the three aspects of quality, price and supply are guaranteed.

Moreover, at present, the localization rate of parts in Tesla's Shanghai gigafactory has reached more than 90%; looking at the degree of industrial agglomeration, in Shanghai and the surrounding area, there are thousands of large-scale parts and components companies, more than 20,000 small and micro enterprises, and 17 listed auto parts companies in Shanghai alone.

With the introduction of Tesla's Shanghai factory, accelerating the improvement and maturity of the new energy vehicle industry chain, the Yangtze River Delta region has gathered hundreds of enterprises such as Ningde Times, Joyson Electronics, Horizon, etc., covering power batteries, chips, body parts, intelligent cockpits and other fields. Moreover, there are a large number of key component suppliers in the Shanghai area, including Bosch and ZF, etc. It can be said that the Yangtze River Delta region has almost the supporting capacity of the whole automotive industry chain.

These wide variety of Tier 1, Tier 2 and Tier 3 suppliers contribute to the assembly of a car; to put it simply, the assembly of the vehicle depends on parts, and behind the different parts are suppliers. Therefore, when Tesla first built a factory in Shanghai, it revitalized the supply chain in the field of new energy vehicles in the entire Yangtze River Delta region.

Coupled with the extreme convenience of Shanghai Lingang itself, from Tesla Shanghai Gigafactory to Shanghai Luchao Port, but 20 minutes by car, Tesla can easily transport the car to the world.

Now the model of Tesla's Shanghai Gigafactory is that the component supplier cluster will not be too far from the factory, and the suppliers are perfect, and there are shipping ports around. The most fundamental reason is the improvement of the supply chain system, which makes Tesla's second factory in China still choose to settle in Shanghai.

If Shanghai is not chosen, after Tesla's second factory in China has finalized the location, the first problem is to promote a supply chain system similar to Shanghai around it. And such a supply chain system can not be completed and used quickly, so the early stage needs to face the logistics costs of the supply chain, so why not continue to use Shanghai's ready-made perfect system?

It is understandable to choose Shanghai, and the reasons for not choosing other cities are also obvious.

What changes can be made after a million production capacity?

After Tesla's second plant in Shanghai is completed and put into use, the annual production capacity of the two factories in Shanghai will reach 1 million units. When production reaches the million level, let's extend a few questions: can costs continue to plummet, can the pick-up cycle be improved, and the impact after having pricing power?

The first question is, can the cost continue to fall?

The sales price of a car roughly includes profits, technical expenses, and costs, while the cost includes research and development costs, production costs, and marketing costs (Tesla may be lower than other car companies in this regard). The most essential is the production efficiency, the production efficiency of Tesla Gigafactory directly determines the manufacturing cost of the whole vehicle, just like Tesla's one-piece casting press, the original 70 parts are reduced to 1-2, such technological innovation although the short-term will increase the cost, but in the long run will continue to dilute the manufacturing cost.

In 2020, the Shanghai Super Factory has 4 integrated casting presses, according to the planning of Tesla's German factory with an annual production capacity of 500,000 units and 8 casting presses, the Shanghai Second Factory should continue to expand the number of casting presses. This is only one aspect, in addition, Tesla's cost of the downward exploration, is not limited to production, the supply chain link of the local spread, channel cost of excellent control, are crucial to the price of bicycles.

Tesla's cost reduction and efficiency increase are also largely due to the depth of localization, which is also one of the reasons why it does not leave Shanghai.

The second question is, can the pick-up cycle be shortened?

Looking at this problem from two aspects, after the shanghai second plant is completed and put into operation, it is likely to mainly solve the export share. Last year, Tesla's Shanghai factory exported 160,000 Teslas, and also formed the law of "guaranteeing domestic at the end of the quarter and providing exports at ordinary times". After that, there was an increase in domestic orders, resulting in the current Tesla Model 3 series expected delivery time of 16-20 weeks, the Model Y long-endurance version is expected to deliver 16-20 weeks, and the longest waiting time of the Model Y rear-wheel drive version and the high-performance version is also 14 weeks and 16 weeks, respectively.

After the completion of the second factory, the law of "guaranteeing the country at the end of the quarter, and providing exports at ordinary times" should be adjusted to a certain extent, and the domestic production capacity will be guaranteed; in addition, after the German factory is put into operation, European orders will further reduce the dependence on imported products.

The third problem is the market pricing power after the production capacity of one million vehicles.

Pricing power is not only considered by the scale of production, but also through product strength, including security, performance, intelligence and other angles, but if a product lowers the price and is equipped with a fairly good intelligence and hardware strength, then the market pricing power at this time will begin to tilt to such products.

Models such as the Toyota Highlander and the Volkswagen Passat in the era of fuel vehicles are benchmark products for market segments. However, in the era of traditional fuel vehicles, because dealers at all levels participated in the sales process, there was no direct operation model like Tesla and other new forces, so consumers did not encounter market changes with frequent price adjustments.

In contrast, Tesla's products are priced in China, raw materials are stable, manufacturing costs are low, then the product price is low; raw material prices rise, manufacturing costs are high, and cost pass-through is adjusted to high prices. How did the market react after this? Still able to obtain market demand, Tesla changed the pricing of products, did not have a negative impact on the demand market, and can smoothly transmit the new costs to consumers through price increases.

Imagine which direction this situation will go when the scale of production reaches the million level.

Therefore, combined with the above points, Tesla products that may be lower in price and may have a shorter delivery cycle than now will have a secondary impact on the new energy market in the Chinese market? When Tesla first built a factory in China, it brought the domestic new energy supply to maturity and spawned a wave of new car-making forces to compete with it, and the next stage may open up the gap and may also promote many companies to start to follow suit.

Instead of emulating Tesla's industrial model, this route is generally not easy for new car manufacturers to go, without funds, without the scale of annual sales of millions. And these companies may be to emulate BYD, for electric vehicle battery technology will always be the core, and BYD this piece is doing very well. Judging from the sales volume in the past two years, BYD is also the only company that has the hope of surpassing Tesla.