China can't bring Tesla, and Mars can't save Musk

Automotive Business Review Magazine

2024-05-27 10:20Posted on the official account of BAIC Business Review

Written by Windsor

Editor / Huang Dalu

Design / Zhao Haoran

If you have difficulties, look for China.

Arriving in Beijing on the afternoon of April 28 and leaving on the afternoon of April 29, Tesla CEO Elon Musk stayed in China for less than 24 hours, and his market value rose by 600 billion yuan.

Musk's arrival was not expected by the outside world, but his appearance did not have the slightest sense of disobedience. Before Musk's private jet landed in China, Tesla's share price had fallen by a third in 2024, losing more than 1.8 trillion yuan. In one day, the news that Tesla's FSD is about to enter China has caught Musk again.

This is not the first time. In 2018, Musk, who was facing the triple dilemma of lack of money, cars, and people, came to China and nibbled on pancakes on the streets of Shanghai, and stamped the super factory in Shanghai by the way.

With the commissioning of the Lingang factory at the end of 2019, Tesla started a fantastic five years, and Musk became the richest man in the world. Tesla has also failed China, stirring up the development of China's new energy market as a catfish.

However, China can't take Tesla anymore.

Production of Tesla's best-selling Model Y has plummeted by double digits since March, according to industry data. In March and April, China's Model Y production was 49,498 units and 36,610 units, down 17.7% and 33% year-on-year, respectively.

Tesla's share of China's pure electric vehicles and plug-in hybrid vehicle market has slipped to 6.8% from 7.8% in 2023, according to the China Passenger Car Association.

Tesla's world's largest manufacturing center plans to cut Model Y production by at least 20 percent between March and June, a person who spoke on condition of anonymity told Reuters.

Production cuts, layoffs, recalls, falling stock prices, what happened to Tesla, which was riddled with negative news?

Chinese brands are hunting Tesla

In 2020, Musk, who is in full swing, once said that within ten years, Tesla can sell 20 million cars a year, twice as many as Toyota, the world's largest car company.

This claim has been questioned by many, but Musk is serious, reiterating this goal in both his 2021 and 2022 impact reports to show that astronomical figures are not his own whim.

On May 23, Tesla released its "2023 Impact Report" again, but it no longer saw the sales target of 20 million vehicles, only the words "replace fossil fuels by selling as many Tesla products as possible".

Part of the reason for Tesla's lack of confidence is in China. Today, Tesla is being hunted by Chinese brands, and every new car launched is a Tesla killer.

At the Xiaomi press conference in March, Lei Jun told the difference between Xiaomi SU7 and Tesla Model 3 new version with a one-page PPT, and the conclusion was that the overall configuration of Xiaomi's car exceeded that of Tesla Model 3 new version.

In May, NIO's second brand Ledao was launched, and the spearhead was Tesla. It is said that before the official debut, some netizens photographed the rear windshield of the L60 full fake test vehicle with the slogan "Better than Edamame Y". "It's longer than the Model Y, wider than the Model Y, and has more space than the Model Y," said Li Bin, NIO's founder, chairman, and CEO.

There are too many such examples, Zhiji, BYD, and Xiaopeng's new products are all sticking to Tesla's positioning. It's not that the Model Y can't afford it, but that Chinese cars are more cost-effective, which is the idea of friendly businessmen, and Tesla is not sitting still.

On April 21, Tesla's new price cut for the Model Y by 5.3%, the lowest level since the car was first launched in China in 2021. Not only that, Tesla also launched a preferential policy of "zero interest" installment purchase for the Model 3 for the first time to boost sales.

None of this has had much effect, and the Chinese market is no longer the no-man's land of many years. Tesla's two main models on sale, the Model 3 and Model Y, were both released in 2016 and 2019, and have been on the market for 8 and 5 years respectively.

In 2023, Tesla's Model 3, which has been on the market for seven years, will finally release a facelift, which is 28,000 yuan higher than the current price at that time, but it has canceled the nostalgia that Chinese people are accustomed to and like, and has been accused of lack of sincerity. Many years ago, Tesla was a pioneer and a catfish, but after a rapid expansion, a powerful man like Musk inevitably slowed down.

Not doing business Musk

In the game with Chinese competitors, the low-cost Tesla was once seen as a killer feature, but the question is, where is the Model 2?

The Information website revealed that at the meeting in the last week of February, Musk decided to prioritize the development of Robotaxi, on the grounds that the Robotaxi team's PPT was too attractive.

Also shared at that conference was the Model 2 project, which was supposed to be a year ahead of Robotaxi. However, Musk was shocked after listening to the Robotaxi team's report and immediately asked, "Why don't you start this project right away?" ”

After the first decision, Tesla said that it would do it, and a press conference about Robotaxi will be held on August 8. According to another person familiar with the matter, the Robotaxi schedule roughly follows the pace originally set for the Model 2. The long-awaited Model 2 has been shelved until 2025.

From low-priced Tesla to Robotaxi, Tesla's shift in strategy has sparked discussion.

The positive view is that Tesla has been accelerating its transformation, betting on breakthroughs in artificial intelligence to bring new revenue growth, as Musk has always said, "Tesla is not a car company, but an artificial intelligence robot company"; The opposing view points out that the Model 2 for the general public is the car that the market wants, and the Robotaxi is still in the mirror.

Tu Le, founder of electric vehicle consultancy Sino Auto Insights, points out that "Robotaxi will take as little as eight to nine years to put into use...... I think they'll say it's been done, but the date I'm giving is still the best-case scenario, and it's already very optimistic. ”

The American business reference website directly shouted that Musk was out, and only one person should be responsible for the company's chaotic state, and only one person's exit could save Tesla: Elon Musk.

At its peak, Musk did not implement any strategy to keep the company safe from the global EV price war, and Tesla was burning cash, losing market share, and squeezing more aging inventory than ever before, according to the report.

Musk, who was not in business, sold a large number of Tesla shares to buy Twitter, tried to get out of the deal, and was then forced to close the deal; He lit some rockets, and to be fair, some also managed to go into space; He implanted brain chips into a group of monkeys; He went to work with the kitchen sink and got himself a few more CEO positions; He openly screwed up Gov. Ron DeSantis' presidential election; He delivered about 4,000 Cybertrucks and then recalled each one due to acceleration failures......

If the Chinese market is a rock, the Western market is a hard piece of ground, and Tesla is caught in the middle, and the company needs a serious leader with a pragmatic idea — no self-driving gimmicks, no flawed Cybertrucks, no online spam postings, no video game marathons, and no haphazard ketamine.

Basically, there is no Musk, but a focused and efficient leader who can deliver the Model 2 on time.

China remains Musk's savior

It will take time to verify whether Robotaxi can become a "lifesaver" for Tesla to boost market confidence, but China is still a blessed land for Tesla.

Despite cutting production at its Shanghai plant, Tesla still expects to sell 600,000 to 700,000 electric vehicles in China in 2024, unchanged from its target at the beginning of the year.

Tesla's future lies in electric vehicles and intelligent driving, and as the forefront of the global electric intelligent transformation, China cannot be ignored. Whether Chinese consumers pay for it or not, whether Robotaxi and FSD can be successfully implemented in China is related to Tesla's future, and Musk understands this.

On April 30, Musk, who returned from China, was in a good mood and said on social platforms that one of the reasons for choosing to release Tesla's self-driving taxi Robotaxi on August 8 was China, "Part of the reason is indeed because August 8 is an auspicious number in China!" Also, that was my triplets' 17th birthday. ”

On May 14, the White House issued a statement saying that tariffs on electric vehicles would be increased from the current 25% to 100%. On May 23, Musk said in a video link event that he opposes the United States imposing tariffs on Chinese electric vehicles.

"Neither Tesla nor I asked for these tariffs, and I was very surprised when the U.S. government announced them...... Restricting freedom of trade or distorting markets is not advisable. He said.

On the same day that Musk supported China, Tesla's much-anticipated Shanghai energy storage gigafactory broke ground.

This is Tesla's first energy storage gigafactory outside the United States, with a total area of about 200,000 square meters and a total investment of about 1.45 billion yuan, and the factory is expected to be put into operation in the first quarter of 2025, with an estimated annual production capacity of 10,000 units and an energy storage scale of nearly 40GWh.

Tom Zhu, Tesla's senior vice president, said the Shanghai Gigafactory will play a key role in the company's global battery storage strategy. Previously, it was rumored that Zhu Xiaotong, who has been promoted to the second position in Tesla's car business, will return to China again to deal with the entry of FSD into China and revive sales in China.

Will China turn the tide again? It's hard, but if there's one place in the world that can, it's probably just China.

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