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On April 5, local time, Tesla officially released the complete document of the third chapter (Master Plan Part 3) of the "Grand Plan" for sustainable new energy development, attracting global attention again.

In 2016, Musk announced the "first chapter" of Tesla's grand plan, which is divided into four steps: the first step is to produce sports cars; the second step is to produce more affordable models after making a profit; the third step is to continue to make a profit to produce lower-cost models; and the fourth step is to provide zero-emission power generation options while achieving the above goals.

So far, Musk has completed the first two steps and is speeding up the third step, that is, to speed up the launch of low-cost models. According to Tesla's official documents, the upcoming low-cost electric car is a compact car, whose name has not been decided yet. It will use lithium iron phosphate battery with 53kWh capacity and will have an annual production capacity of 4 million vehicles, of which 2 million will come from the new Mexican factory, while the remaining 2 million will be divided equally between the Shanghai factory and the Berlin factory. According to Tesla's plan, the total sales of the electric car is 42 million, almost twice as many as the Model 3 and Model Y, and will become Tesla's best-selling model. With reference to the available information, in the future, the Shanghai factory will undertake part of the production of its low-cost models, mainly supplying the Chinese market and exporting a small portion to overseas markets.

Why did Tesla launch low-cost electric cars? According to Tesla's annual report, Tesla's total revenue in 2022 was US $81.462 billion, an increase of 51.35% over the same period last year, of which auto sales revenue was US $67.21 billion, an increase of 52.32% over the same period last year. Net profit was US $12.583 billion, an increase of 127.79% over the same period last year.

In terms of regions, the United States is still Tesla's largest market in the world. Tesla's revenue in the US market in 2022 was US $40.553 billion, an increase of 69.16% over the same period last year, accounting for 49.76% of the company's total revenue, while the Chinese market's annual operating revenue in 2022 was US $18.445 billion, an increase of 33.23% over the same period last year, but its share fell to 22.27% from 25.72% in 2021. Overall, although Tesla achieved growth in the Chinese market in 2022, it fell short of market expectations, after two consecutive years of year-on-year growth of more than 100%. Tesla's revenue in the Chinese market was $2.979 billion in 2019 and $6.662 billion in 2020.

The sharp decline in the growth rate of Tesla in the Chinese market, on the one hand, is caused by the epidemic and the impact of spare parts supply, on the other hand, the rapid rise of new power brands, domestic new energy models blowout to the market, Tesla faces the competitive pressure of many competitors.

The Shanghai factory is Tesla's first overseas factory, located in Shanghai's port area, including vehicle production area, test area, parts production area and joint plant (maintenance workshop). It mainly produces Model 3 and Model Y models, while the Shanghai factory undertakes the important task of Tesla's domestic sales and external supply. About 60% of Tesla's electric cars produced in China are sold in China. The rest is exported to overseas markets such as Australia, Europe, Japan and Singapore. Tesla retail 439800 vehicles in the Chinese market in 2022, an increase of 37.1% over the same period last year, according to the Federation of passengers.

In fact, it is not easy for Tesla to achieve a year-on-year growth of 37.1% in the Chinese market. Tesla has slashed prices and subsidies on Chinese mainland since October 2022, and has since announced insurance subsidies for car owners who buy domestically made Tesla, up to 8000 yuan. After entering 2023, Tesla sharply reduced the starting prices of two domestic models, including Model 3 by 2.0-36000 yuan and Model Y by 2.9-48000 yuan.

Tesla has been accused of being "unable to sell" because of sharp price cuts in the Chinese market, while the background is the rapid rise of new power brands led by NIO and ideal, and the rapid layout of new models by domestic new energy brands dominated by BYD, resulting in a sharp increase in competitive pressure on Model 3 and Model Y models. Of course, Tesla's gross profit margin is much higher than that of other automakers, so Tesla can keep cutting prices to improve the competitiveness of Model 3 and Model Y products and counter car brands, but this is not a long-term solution. For Tesla, the introduction of new models is the best solution. after all, Model 3 and Model Y have been on the market for a long time, and the core advantages of the two models have become less and less obvious. Tesla either launched the Model 3/Model Y replacement model or launched a new model, while it is rumored that low-cost electric cars with less than 200000 yuan have been seen as a sharp weapon for Tesla to return to the peak.

According to market expectations, Tesla will announce information about low-cost electric cars at the Investor Day in March, but Musk and Tesla executives spend a lot of time describing how Tesla improves operational efficiency and reduces costs. There is almost no mention of "new technologies and new models" that have attracted much attention from the outside world, directly causing Tesla to lose 260 billion of his market value.

Of course, it is only a matter of time before Tesla launches low-cost models, and the goal of launching low-cost models is also very clear, undoubtedly in order to seize more market share. At present, Tesla is still a highly competitive electric vehicle company in the world, and once Tesla launches a low-cost electric vehicle, it will be a catfish to the global electric vehicle market.

According to the China Association of Automobile Manufacturers, compact new energy vehicles will become the mainstream of the market in 2022, with total sales of 2.386 million vehicles, a year-on-year increase of 1.4 times. In terms of product prices, 150000 to 200000 yuan is the most popular price range in the market, with cumulative sales of 1.855 million vehicles in 2022, a year-on-year increase of 2.1 times.

In 2022, the overall sales of new energy vehicles in China was 6.887 million, an increase of 93.4 per cent over the same period last year. It is not difficult to see that electric vehicles ranging from 150000 yuan to 200000 yuan account for 27% of the domestic market share of new energy vehicles, and have become the absolute growth engine of the new energy vehicle industry. Therefore, it is imperative for Tesla to launch low-cost electric vehicles. At that time, Tesla will launch a more fierce competition with Chinese new energy vehicle companies, and the first one to bear the brunt is BYD.

The new power of car-building in China strives to improve the brand, challenge the luxury car market, and strive to be the BBA of the new energy car era, while Tesla never advertises himself as a luxury car brand. There is a market view that Tesla makes cars more and more like a traditional car company, as if Tesla wants to be Toyota or Volkswagen in the era of new energy vehicles.

China's new energy automobile industry has gone from the stage of contention of a hundred schools of thought to the stage of competition among the strong, and will eventually enter the era in which the winner is the king. The industry is accelerating from the specific sales to the specific value stage, the knockout competition of new energy vehicles will improve and upgrade.

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