China Market situation and outlook

[maoing]

Good finding. I think 4500 might be a good estimate for China 2014 sales. The december import number was really surprisingly LOW.

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Looks like the total imports for China were 4800 in 2014. That means that there were approximately 456 cars imported in December.

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I noticed that Model X reservation significantly slowed down in recent months.
Last record in Model S Tally thread, on 11/24/14, reservation # 2345.

http://club.autohome.com.cn/bbs/thread-c-2664-37553981-1.html
on 01/13/15, reservation # 2413.

So 68 reservations in 50 days. It used to be 6-7/day in summer. I think it's partly due to the Model X delay and fewer people is willing to wait another year to get the vehicle.

 

[sundaymorning]

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I noticed that Model X reservation significantly slowed down in recent months.
Last record in Model S Tally thread, on 11/24/14, reservation # 2345.

http://club.autohome.com.cn/bbs/thread-c-2664-37553981-1.html
on 01/13/15, reservation # 2413.

So 68 reservations in 50 days. It used to be 6-7/day in summer. I think it's partly due to the Model X delay and fewer people is willing to wait another year to get the vehicle.

Maoing, a nice place to start is to listen to CC, Elon has stated many times that Tesla is doing its best not to sell model X momentarily, it's primary focus is S, the temporary slowdown in X orders was strategic and appears to be working. This explains why demand for S keeps growing Q by Q. Once X is available, Tesla won't have an issue marketing it, the vehicle nearly sells itself. Keep in mind that despite not a single test drive was given, or a prototype in any showroom, there are over 20k customers waiting for their Tesla X. As a shareholder, demand for X is the least of my concerns.

 

[maoing]

My point is X reservation is correlated with S enthusiasm. So X reservation slow down is partly proved the S enthusiasm cooling down.

Maoing, a nice place to start is to listen to CC, Elon has stated many times that Tesla is doing its best not to sell model X momentarily, it's primary focus is S, the temporary slowdown in X orders was strategic and appears to be working. This explains why demand for S keeps growing Q by Q. Once X is available, Tesla won't have an issue marketing it, the vehicle nearly sells itself. Keep in mind that despite not a single test drive was given, or a prototype in any showroom, there are over 20k customers waiting for their Tesla X. As a shareholder, demand for X is the least of my concerns.

 

[sundaymorning]

My point is X reservation is correlated with S enthusiasm. So X reservation slow down is partly proved the S enthusiasm cooling down.

And I think your point is wrong, Elon has stated numerous times they are anti-selling the X. He has also stated that demand for S is growing in North America and Europe, aside from China, wait time is getting longer, not less. The view that S demand is down is proprosterous.

 

[ecarfan]

Maybe @maoing was referring only to China.

We don't know yet what Model S sales have been quarter by quarter in China.

 

[sundaymorning]

Maybe @maoing was referring only to China.

We don't know yet what Model S sales have been quarter by quarter in China.

Lets hope that's what he means because that comment border lines you know what..
Care to chime in Maoing?

 

[maoing]

Yes, I'm specifically talking about China S demand in "China" thread.

Maybe @maoing was referring only to China.

We don't know yet what Model S sales have been quarter by quarter in China.

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Sorry, if it's not clear. I found December China imports number surprisingly LOW and model X reservation slowed down significantly in past 2 months as a side proof.

Lets hope that's what he means because that comment border lines you know what..
Care to chime in Maoing?

 

[sundaymorning]

Yes, I'm specifically talking about China S demand in "China" thread.



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Sorry, if it's not clear. I found December China imports number surprisingly LOW and model X reservation slowed down significantly in past 2 months as a side proof.

I do not think it is a big secret that demand for Model S is down in China due to charging, Elon has stated this last week and it was all over the news. Although he also thinks the sell off in Tesla stocks was a bit overdone; which indicates to me that he thinks the market value of Tesla is undervalued at the moment.

Regarding X, there is a bit of a slow done in orders, I can agree with that, but X does not have any correlation to Model S demand. Tesla is currently trying to "anti-sell" the X, additionally, the delays in X might most likely mitigate customers from putting down a hefty deposit. Currently the wait list for X is above 20,000, without a single advertisement, test drive or prototype. Which other auto company has that kind of drawing power? Demand is a non-issue and Tesla can raise demand by will, but why would it when X is not available till Summer, and S is selling out?

 

[maoing]

Before China December number out, there is no number proof that China demand dropped a lot. Elon did state that but without number support. For the China demand, I don't think TM can raise demand at will, it's way tooooo optimistic, the same applies for many countries in ROW like Japan, Australia, Germany etc.

I do not think it is a big secret that demand for Model S is down in China due to charging, Elon has stated this last week and it was all over the news. Although he also thinks the sell off in Tesla stocks was a bit overdone; which indicates to me that he thinks the market value of Tesla is undervalued at the moment.

Regarding X, there is a bit of a slow done in orders, I can agree with that, but X does not have any correlation to Model S demand. Tesla is currently trying to "anti-sell" the X, additionally, the delays in X might most likely mitigate customers from putting down a hefty deposit. Currently the wait list for X is above 20,000, without a single advertisement, test drive or prototype. Which other auto company has that kind of drawing power? Demand is a non-issue and Tesla can raise demand by will, but why would it when X is not available till Summer, and S is selling out?

 

[Papafox]

Before China December number out, there is no number proof that China demand dropped a lot. Elon did state that but without number support. For the China demand, I don't think TM can raise demand at will, it's way tooooo optimistic, the same applies for many countries in ROW like Japan, Australia, Germany etc.

Overall, Tesla can raise demand at will by "pulling levers" which equates to events, advertising, etc. The plan right now is that no advertising is needed before 2016, but in a pinch it could be used to keep the assembly lines moving at full capacity. Tesla has no doubt researched the decline in China sales and Tesla's conclusion of concern about parking garage charging is likely valid. I would expect to see a resurgence of China demand in 2015. Also, remember that no P85Ds were offered for China export in December. I'm sure many of the "price is no object" buyers will opt for the P85D and you see some recovery as soon as China P85Ds start shipping.

 

[Auzie]

I do not think it is a big secret that demand for Model S is down in China due to charging, Elon has stated this last week and it was all over the news. Although he also thinks the sell off in Tesla stocks was a bit overdone; which indicates to me that he thinks the market value of Tesla is undervalued at the moment.

Regarding X, there is a bit of a slow done in orders, I can agree with that, but X does not have any correlation to Model S demand. Tesla is currently trying to "anti-sell" the X, additionally, the delays in X might most likely mitigate customers from putting down a hefty deposit. Currently the wait list for X is above 20,000, without a single advertisement, test drive or prototype. Which other auto company has that kind of drawing power? Demand is a non-issue and Tesla can raise demand by will, but why would it when X is not available till Summer, and S is selling out?

sundaymorning, I am curious about the reference for Elon commenting on TSLA being oversold. I did not come across such statement, perhaps I missed it.

I agree with you that correlation between S and X orders is weak at best. Segments may appear slightly overlapped due to release of D. D may have attracted some X buyers.

Not sure where you got the info on above 20,000 X reservations, Model X tally shows approx. 15,000.

Before China December number out, there is no number proof that China demand dropped a lot. Elon did state that but without number support. For the China demand, I don't think TM can raise demand at will, it's way tooooo optimistic, the same applies for many countries in ROW like Japan, Australia, Germany etc.

Agree with you maoing, model S is very US centric car, built for US market. Initial S uptake in other world markets may be slower, for various reasons. I do expect much better uptake in non US markets in 2016, with more awareness of Tesla brand.

 

[maoing]

China, Japan and Germany are 3 biggest economy entities 2nd to US. With known reasons, it's hard for TM to penetrate Japan and Germany in short term, so it's reasonable to expect big success in China for TM win. From Elon's initial comments in Q4 ER about China demand, many investors' expectation is to deliver more than 10K easily in 2014, but it ended up less than 5K which is the conservative estimation from the beginning.

The charging facility is just one (small) reason. I'm afraid Elon won't give the full picture of the challenges at this point. The more fundamental ones are government relationship:
1) waiving import duty tax: China government once mentioned that during Elon's visit, but no follow-up since then, it's about 25% of the import price;
2) waiving purchase tax: China government promised to waive purchase tax (17%) for EV, but so far Tesla was excluded;
3) sharing charging network: China state grid has strong ambition to build fast charging network across the country, also state grid has all the resources to built charging stations along the highway. Without cooperation with state grid, so far Tesla can only build super charger station inside cities NOT single one along highway. This is imminent to be resolved, otherwise the Tesla super charger stations will be redundant to grand China EV plan.

Overall, Tesla can raise demand at will by "pulling levers" which equates to events, advertising, etc. The plan right now is that no advertising is needed before 2016, but in a pinch it could be used to keep the assembly lines moving at full capacity. Tesla has no doubt researched the decline in China sales and Tesla's conclusion of concern about parking garage charging is likely valid. I would expect to see a resurgence of China demand in 2015. Also, remember that no P85Ds were offered for China export in December. I'm sure many of the "price is no object" buyers will opt for the P85D and you see some recovery as soon as China P85Ds start shipping.

 

[sundaymorning]

sundaymorning, I am curious about the reference for Elon commenting on TSLA being oversold. I did not come across such statement, perhaps I missed it.

I agree with you that correlation between S and X orders is weak at best. Segments may appear slightly overlapped due to release of D. D may have attracted some X buyers.

Not sure where you got the info on above 20,000 X reservations, Model X tally shows approx. 15,000.



Agree with you maoing, model S is very US centric car, built for US market. Initial S uptake in other world markets may be slower, for various reasons. I do expect much better uptake in non US markets in 2016, with more awareness of Tesla brand.

Auzie, there was a comment made by a Model S owner in the "short term price movement" thread, who attended the after party in Detroit and met Elon. The individual asked Elon about the China comment as it created a bit of a havoc in the stock price, from what I remember, that member stated Elon thinks the market over reacted. Hence, according to this member, "that's the closest we'll get to Elon stating Tesla is undervalued." I paraphrase.. and you can try to dig in that thread to confirm and weigh its value.

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sundaymorning, I am curious about the reference for Elon commenting on TSLA being oversold. I did not come across such statement, perhaps I missed it.

I agree with you that correlation between S and X orders is weak at best. Segments may appear slightly overlapped due to release of D. D may have attracted some X buyers.

Not sure where you got the info on above 20,000 X reservations, Model X tally shows approx. 15,000.



Agree with you maoing, model S is very US centric car, built for US market. Initial S uptake in other world markets may be slower, for various reasons. I do expect much better uptake in non US markets in 2016, with more awareness of Tesla brand.

Auzie, there was a comment made by a Model S owner in the "short term price movement" thread, who attended the after party in Detroit and met Elon. The individual asked Elon about the China comment as it created a bit of a havoc in the stock price, from what I remember, that member stated Elon thinks the market over reacted. Hence, according to this member, "that's the closest we'll get to Elon stating Tesla is undervalued." I paraphrase.. and you can try to dig in that thread to confirm and weigh its value.

I also mentioned About X having 15,000 pre-orders after visiting the tally page, but was notified by Nigel or another senior member that the current number of X reservations is likely around 20k. Can anyone else confirm the 20k number?

 

[Auzie]

From Elon's initial comments in Q4 ER about China demand, many investors' expectation is to deliver more than 10K easily in 2014, but it ended up less than 5K which is the conservative estimation from the beginning.

The charging facility is just one (small) reason. I'm afraid Elon won't give the full picture of the challenges at this point. The more fundamental ones are government relationship:
1) waiving import duty tax: China government once mentioned that during Elon's visit, but no follow-up since then, it's about 25% of the import price;
2) waiving purchase tax: China government promised to waive purchase tax (17%) for EV, but so far Tesla was excluded;
3) sharing charging network: China state grid has strong ambition to build fast charging network across the country, also state grid has all the resources to built charging stations along the highway. Without cooperation with state grid, so far Tesla can only build super charger station inside cities NOT single one along highway. This is imminent to be resolved, otherwise the Tesla super charger stations will be redundant to grand China EV plan.

My guess is that at this stage Elon does not have a full picture of challenges to give us, he is on a learning curve, like the rest of Tesla team.

Not all investors base their expectation on Elon's expectations. Elon is as human as any of us and many of his projections are just his own, not always shared by all investors. Likewise, Elon's understanding of "challenges" often differ from other peoples' understanding. Any Tesla investor is far better off developing their own understanding of challenges, rather than relying on anyone else.

sundaymorning thanks for reference

 

[RationalOptimist]

Suspect Maoing has it absolutely right that govt relationship is key. The biggest single issue is whether model S can be made compatible w the huge roll-out of "fast" charging stations that is happening. If I were thinking of buying an electric vehicle in China, and knew the country was determined to roll out the world's most serious effort at electrification, I would *really* want to buy a car that could tap into that plan. So that's my biggest fear for China. That somehow the govt sees electrification as religiously as many here do and wants China to own that part of the future. In principle they could deliberately make it hard for Tesla to be part of their plans to aid local manufacturers.

I've heard several people say Tesla should be able to produce an adaptor for the new local standard. That would be huge, in my opinion. Any one have confirmation on likelihood of this?

 

[Drax7]

Suspect Maoing has it absolutely right that govt relationship is key. The biggest single issue is whether model S can be made compatible w the huge roll-out of "fast" charging stations that is happening. If I were thinking of buying an electric vehicle in China, and knew the country was determined to roll out the world's most serious effort at electrification, I would *really* want to buy a car that could tap into that plan. So that's my biggest fear for China. That somehow the govt sees electrification as religiously as many here do and wants China to own that part of the future. In principle they could deliberately make it hard for Tesla to be part of their plans to aid local manufacturers.

I've heard several people say Tesla should be able to produce an adaptor for the new local standard. That would be huge, in my opinion. Any one have confirmation on likelihood of this?

Its just electrons flowing, sure tesla can provide an adaptor to whichever standard they choose.

 

[pGo]

Maoing,

Thanks for showing your view on China. One question though. How do people perceive Model S in China? Do they compare it with S class? If so, Model S is still cheaper than it in China without government support. Charging issues aside, isn't Tesla selling like a hot new tech car?

One more comment on charging. I don't see new supercharger rollout in 2016 from 2015 in new China maps. Is Tesla expected to rely on government rollout of charging network?

 

[ev-enthusiast]

Its just electrons flowing, sure tesla can provide an adaptor to whichever standard they choose.

If charging protocoll is known and charging rates are compatible it is technically feasible to build an adapter.
If there is a need for this special adapter Tesla might build one, just like they promised and deliver now for CHAdeMO (for $450):
Model S-to-CHAdeMO Adapter goes on sale this month

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One more comment on charging. I don't see new supercharger rollout in 2016 from 2015 in new China maps. Is Tesla expected to rely on government rollout of charging network?

As far as I know this is the first new SuperCharger installed by Tesla in China (city of Cangzhou) in 2015.

 

[pGo]

Ev enthusiast, I am talking about map showing no new locations for 2016 from 2015. The maps do show supercharger rollout growing in 2015. Not in 2016.

 

[ev-enthusiast]

Ev enthusiast, I am talking about map showing no new locations for 2016 from 2015. The maps do show supercharger rollout growing in 2015. Not in 2016.

After double checking both maps for 2015 and 2016 SuperCharger rollout in China I get your point.
You are correct, the 2016 map does not show any progress beyond the installations in 2015 map.

I would take these SuperCharger maps for the next years shown on the Tesla Motors web site only as a rough guidline for future SuperCharger installations.
I would expect that Tesla did not finalize a lot of locations for future SuperChargers shown on these maps.
There might be additional internal plans at Tesla, that are simply not included in the maps on their web site.

By the way same thing if you take a look at the corresponding SuperCharger maps for Europe.
The european maps for 2015 and 2016 show no progress in some european countries (UK, Norway, France, Germany).
I do not expect Tesla to stop SuperCharger rollout in these countries by end of 2015.

As far as I know there was no official announcment from Tesla to stop SuperCharger rollout in some countries after 2015.
My perception has always been that Tesla will grow the SuperCharger network steadily.

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Looks like Tesla Motors is adressing issues in China for new car sales by easier trade in of used cars.

Bloomberg:
“The electric-car manufacturer led by billionaire Elon Musk will liaise with used-car traders to buy vehicles from customers in Beijing, Shanghai and Hangzhou, it said in an e-mailed statement. The company will deduct the value of the sale from the price of the Model S, which starts from 648,000 yuan ($104,000) in China.”