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Tesla's push to start handing over a portion of its battery pack production to suppliers during the Model 3's changeover window is a choice it made after remeasuring costs, according to local media.
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Prototypes of the revamped Model 3 are currently being tested on the road at Tesla's Shanghai factory over weekends, with the production line doing further refinement work, according to local media.
(Image: Screenshot from a Tesla China video.)
At Tesla's (NASDAQ: TSLA) Shanghai plant, the Model 3's production workshop is currently under a high level of secrecy, but production line tuning is almost complete, local media Jiemian said today, citing an employee of a third-party supplier working at the plant.
Prototypes of the revamped Model 3 are currently being tested on the plant's roads over weekends, with the production line doing further refinement work, the employee said.
Tesla is planning to launch an updated Model 3 to compete more favorably with local Chinese car companies, the report said.
One of Tesla CEO Elon Musk's key trips to China previously was to visit Tesla's Shanghai factory to inspect the new Model 3, the report said.
Musk visited China in late May and toured the Tesla Shanghai factory, which is Tesla's largest factory in the world, producing the Model 3 and Model Y with a current annual capacity of more than 1 million vehicles.
On March 1, Reuters reported that Tesla was working to retool its Shanghai assembly plant for a revamped version of the Model 3, a project codenamed Highland by Tesla.
The Highland version of the Model 3 is expected to go into production in Shanghai in September, the Reuters report said, citing a person familiar with the matter.
With Highland, Tesla aims to cut production costs and boost the appeal of the electric sedan, which debuts in 2017, people involved in the project said, according to the previous Reuters report.
On May 16, Bloomberg reported, citing people familiar with the matter, that Tesla was nearing the final stages before starting trial production of its revamped Model 3 sedan in Shanghai.
The revamped Model 3 is slightly longer, sportier and has a sleeker interior design than earlier versions, those people said, according to the report.
Earlier today, Bloomberg reported that Tesla is laying off some battery production workers at its Shanghai plant, amid steep discounts on cars from all manufacturers.
Earlier this week, Tesla began notifying some employees on the battery assembly line at the first phase of its plant in Shanghai about the layoffs, the report said.
Jiemian's report today said two Tesla factory floor employees in Shanghai confirmed the information, but they were not sure of the percentage of layoffs.
Yesterday, local media outlet Shifang Zhixing reported that the layoffs on Tesla's battery assembly line in phase 1 would exceed 50 percent.
The layoffs are partly due to the US government's ban on subsidies for batteries imported from China, requiring local car companies to use US-made batteries, the report said, citing an insider.
Jiemian's report today cited a person familiar with the matter as saying that the batteries made at Tesla's Shanghai plant are for domestic models and not for North America.
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Auto industry players should not disrupt fair competition with abnormal prices and should avoid cutting prices in a reckless manner, a MIIT official said.
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Price wars are clearly not what China's main industry regulator wants to see.
An official from China's Ministry of Industry and Information Technology (MIIT) said at the 2023 China Auto Forum in Shanghai on July 6 that participants in the country's auto industry should not compete with abnormal prices, according to a report on state broadcaster CCTV today.
So far this year, the Chinese auto industry has seen the largest wave of price cuts in its history, including more than 100 models from more than 30 brands, some at any cost, the report noted.
In response to the phenomenon, the MIIT source said that the development of China's auto industry has entered a new phase, with new energy vehicles (NEVs) forming a certain lead and auto companies should regulate their marketing activities, the report said.
Auto industry players should not disrupt fair competition with abnormal prices and should avoid reckless price cuts, while strengthening technological innovation and improving product quality, the MIIT official Miao Changxing was quoted as saying in the report.
Yesterday, the China Association of Automobile Manufacturers (CAAM) and 16 major automakers jointly signed a pledge to maintain fair market order in the auto industry.
The 16 car companies include BYD, Nio, Li Auto, Xpeng, Tesla, SAIC, Geely and Great Wall Motor, who pledged to maintain a fair competition order and not to disrupt the order in the market with abnormal prices.
The initiative is just the beginning, and further restraint on bad behavior, including malicious price cuts, will depend on self-regulation and regulatory means, Fu Bingfeng, executive vice-president and secretary general of the CAAM, was quoted by CCTV in the report today.
Separately, Xu Changming, vice director of the National Information Center, said yesterday at the 2023 China Auto Forum that Tesla's average profit per vehicle is high enough that it has ammunition if it wants to fight price wars.
Tesla has previously cut its price in China by RMB 30,000 yuan ($4,140), and its average profit per vehicle is $10,426, leaving room for a 40,000 yuan price cut if the price war continues, Xu said, according to a video circulating on social media.
The calculation is based only on Tesla's 1.31 million global deliveries last year, and if it reaches its 1.8 million delivery target this year, then costs are expected to fall further, Xu noted.
Tesla's average profit per vehicle is 8.5 times that of BYD, whose figure last year was RMB 8,854 yuan per vehicle, according to Xu.
($1 = RMB 7.2401)
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Earlier this week, Tesla began notifying some employees on the battery cell assembly lines at the first phase of its plant in Shanghai about that layoff, according to Bloomberg.
(Image: Screenshot from a Tesla China video.)
Tesla (NASDAQ: TSLA) is laying off some battery production workers at its Shanghai plant, amid heavy discounts on cars from all manufacturers, Bloomberg reported today.
Earlier this week, Tesla began notifying some employees on the battery cell assembly lines at the first phase of its plant in Shanghai about the layoffs, the report said, citing people familiar with the matter.
Some employees have been allowed to move to another shop, such as stamping, painting or general assembly, the people said. It's unclear how many battery workers may be let go, or the specific reasons behind the layoffs, according to the report.
Tesla employs about 20,000 people at its Shanghai plant, which can produce about 1 million vehicles a year, the report noted.
While Tesla uses batteries made by LG Energy Solution and CATL in its vehicles, those battery cells must be made into battery modules and packs before they can be installed in the cars, a process that is done for the most part in Tesla's battery workshop.
Some automation equipment that could help replace human labor on the battery production line is in the design and construction stages, one of the people said, according to the report.
The report did not provide more details on the layoff plan, though a local media outlet reported yesterday that more than 50 percent of the phase one battery assembly line workforce would be cut.
The layoffs are partly due to the US government's ban on subsidies for batteries imported from China, requiring local car companies to use US-made batteries, Chinese media outlet Shifang Zhixing said in a report yesterday, citing an insider.
In addition, the ample battery assembly capacity at Tesla's Shanghai plant is also a major reason for the layoffs, according to the report.
The battery assembly line in phase two has a capacity of 870 batteries on a single shift, while the day shift plus the night shift in the two battery plants can provide 3,400 batteries, more than the amount needed for vehicle production, according to the report.
Vehicle manufacturing-related jobs have not been affected by the layoffs yet, after all, Tesla vehicle sales are still strong, the report said.
Tesla sold 93,680 China-made vehicles in June, including exports, the second highest on record after 100,291 in November 2022, according to data released by the China Passenger Car Association (CPCA) on July 4.
Tesla's Shanghai plant produces the Model 3 and Model Y, and their breakdown sales figures are currently unknown.
In May, Tesla sold 42,508 vehicles in China, ranking third in China's new energy vehicle (NEV) market with a 7.3 percent share, according to the CPCA. Tesla's Shanghai plant exported 35,187 vehicles in May.
Model Y retail sales in China in May were 31,054, making it the best-selling SUV in China that month, according to the CPCA's rankings.
From January to May, Model Y retail sales in China were 152,461 units, also the best-selling SUV in China during that period.
Yesterday, 16 car companies, including Tesla, BYD, Nio, Xpeng and Li Auto, signed a pledge in Shanghai to jointly maintain order in China's auto market and not to disrupt fair competition with abnormal prices.
Earlier today, Tesla ramped up referral incentives for the Model 3 and Model Y in China to boost sales of the two models.
Tesla to equip revamped Model 3 in China with CATL's new battery, report says
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Tesla sold 93,680 China-made vehicles in June, including exports, the second-highest number on record after November 2022's 100,291 vehicles.
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Tesla (NASDAQ: TSLA) has increased referral incentives in China for the Model 3 and Model Y to boost sales of the two locally produced models.
Starting July 7, Tesla owners who refer others to buy the Model 3 and Model Y will receive an upgraded benefits package, the US electric vehicle (EV) maker said today on Weibo.
The package includes a RMB 3,500 ($410) cash bonus for the purchaser, which can be used against the purchase price, and a free 90-day trial of Enhanced Autopilot (EAP) assisted driving software.
Referrals will be rewarded with 7,000 points that can be redeemed for gifts including a TeslaMic, Model Y for toddlers, or supercharging miles.
Tesla has previously run an owner referral program in China for several years, which offers 1,500 kilometers of free supercharging for both the referrer and the purchaser.
The referral program was discontinued on September 18, 2021, and reinstated on October 24, 2022, but only offered bonus points.
The upgrade to the referral bonus for the Model 3 and Model Y comes on the heels of Tesla's July 1 announcement of an RMB 35,000 to RMB 45,000 discount for the full line of Model S and Model X in China.
The Model S and Model X are not produced in China, and their deliveries here began in late March.
Tesla was also encouraging owners to recommend friends to buy the two models. If a customer buy the Model S and Model X on someone else's referral, they would receive an additional RMB 7,000 bonus, free supercharging benefits for three or six years, and 90 days of free EAP benefits. The referrer will then receive a 48,000-point bonus that can be redeemed for supercharger miles.
Tesla sold 93,680 China-made vehicles in June, including exports, the second highest on record after 100,291 in November 2022, according to data released by the China Passenger Car Association (CPCA) on July 4.
That's up 18.72 percent from 78,906 units a year ago and up 20.57 percent from 77,695 units in May.
Tesla's June sales in China and the breakdown of China-made vehicles exported are expected to be known in the coming days.
($1 = RMB 7.2439)
Tesla offers up to $6,200 discounts for Model S and Model X in China
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