Tesla China Deliveries Soar 40%, Model Y Production Slashed!

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Tesla China Deliveries Soar 40%, Model Y Production Slashed!

Tesla's aggressive promotions and potential production cuts in China raise questions about the company's sales and market strategy

Questions to inspire discussion

  • What is Tesla considering cutting production of?

    Tesla is considering cutting Model Y production by 20% due to changes in market demand and supply chain issues.

  • What is the current trend in auto loan rejection rates in the US?

    Auto loan rejection rates in the US are at a 10-year high, with about 1 in 6 to 1 in 7 people being rejected, which could potentially affect Tesla buyers.

  • What changes have occurred in Tesla's China deliveries?

    Tesla's China deliveries surged 40%, but Model Y production was cut, and there are changes in loan rates and supply chain due to production exceeding demand in Q1.

  • Why does Tesla need to produce less in Q2?

    Tesla is expecting to return to normal inventory levels in Q2, so they need to produce less, which is a supply chain issue discussed in the earnings call.

  • What is Tesla's strategy for increasing volume and remaining competitive in China?

    Tesla's growth in China has slowed, and they need to enter a lower price tier to increase volume and remain competitive, which may involve new models and a possible Model Y refresh. 

 

Key Insights

  • 🚗 Tesla's aggressive promotions, including free supercharging and zero interest/down payments, likely contributed to the surge in deliveries in China.
  • 📉 The potential cutting of Model Y production by 20% could be a risky move for Tesla, especially with the current market conditions and competitive pricing strategies.
  • 🚗 Lower cost vehicles of different models are announced, indicating no huge drop in pricing for existing vehicles.
  • 💰 Tesla's cost-saving strategies, such as offering promotions and owning supercharger assets, contribute to their competitive advantage.
  • 📊 Model Y production in China fell by 17.7% in March and by 33% in April, raising questions about the production slowdown's impact on Tesla's overall sales.
  • 📉 Tesla's production cuts indicate that production exceeded demand in Q1, leading to an excess of inventory.
  • 🚗 New models developed in Shanghai may have a faster cycle time perspective due to localized supply bases.
  • 📈 The surge in Tesla China deliveries indicates strong demand and the need to unlock it financially. 

 

#Tesla

XMentions: @herbertong @theJeffLutz @HabitatsDigital 

 

Clips 

  • 00:00 🚗 Tesla China deliveries surged 41% despite reports of a 20% Model Y production cut, with 13,800 new registrations last week and various promotions driving the increase.
    • 01:35 🚗 Tesla is considering cutting Model Y production by 20% and the timing is seen as favorable for taking on loan risk due to reductions in MSRP and COGS, while auto loan rejection rates in the US are at a 10-year high, potentially affecting Tesla buyers.
      • Tesla is considering cutting Model Y production by 20% and the timing is seen as favorable for taking on loan risk due to reductions in MSRP and COGS.
      • Auto loan rejection rates in the US are at a 10-year high, with about 1 in 6 to 1 in 7 people being rejected, which could affect Tesla buyers.
    • 03:52 🚗 Tesla is not planning to dramatically reduce pricing of existing vehicles, but instead focus on lower cost models and promotions, with the timing of inventory buildup and promotions being strategically beneficial.
      • 04:47 🚗 Tesla's China deliveries are surging, with record numbers at service centers and cost-saving promotions for Model Y loans and supercharger utilization.
        • 05:51 📉 Tesla China plans to cut Model Y production by at least 20% in March to June, with reports of significant production cuts at its Shanghai Factory, resulting in a decline in production compared to the same period in 2023.
          • 07:15 🚗 Tesla's China deliveries surged 40%, but Model Y production was cut due to production exceeding demand in Q1, leading to changes in loan rates and supply chain, with expectations to return to normal inventory levels in Q2.
            • Tesla's China deliveries surged 40%, but Model Y production was cut, and there are changes in loan rates and supply chain due to production exceeding demand in Q1.
            • Tesla is expecting to return to normal inventory levels in Q2, so they need to produce less, which is a supply chain issue discussed in the earnings call.
          • 08:58 🚗 Tesla's China deliveries surge 40%, but Model Y production is cut due to inventory burn-off and the need to enter a lower price tier to remain competitive.
            • Tesla's growth in China has slowed, and they need to enter a lower price tier to increase volume and remain competitive.
            • Tesla's production and deliveries in China are expected to lower due to inventory burn-off, with new models and a possible Model Y refresh in the works.
          • 10:35 🚗 Tesla China deliveries surged 40% due to lower rates, record days at delivery centers, and incentives/stimulus in China, despite weaker April.

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            Duration: 0:11:26

            Publication Date: 2024-05-29T22:59:24Z

            WatchUrl:https://www.youtube.com/watch?v=8pozvD129fI

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