Supplementing the article below, note the following comment from José Pontes in his latest China EV sales report (which he publishes monthly). In this comment, aside from references to EV sales standings for the year to date, José discusses Tesla’s dropping Model 3 sales in China.
“Tesla’s midsize sedan should bounce back in September, likely to #8, but considering that 12 months ago the Model 3 was 2nd, with some 90,000 registrations, we can see that deliveries have dropped a significant 26% YoY. One should be worried about the future of the US model in China, especially considering that this drop happened in the context of a market with three-digit growth rates and that several Model 3-******s (namely, the BYD Seal and NIO ET5) are about to land on the market. Price cut, anyone?…”
However, note that refers to the Model 3, which went from 92,755 sales in China in the first 8 months of 2021 to 69,025 sales in the first 8 months of 2022, but Model Y sales went from 59,900 sales to 172,711 sales in the same period. Clearly, there’s a much larger increase in Model Y sales than decrease in Model 3 sales.
José also noted that Tesla had 10% of Chinese plugin vehicle sales in the first 8 months of 2021 but 7% of Chinese plugin vehicle sales in the first 8 months of 2022.
Above and below are just a few of the puzzle pieces regarding the Tesla story in China at the moment, but look at them carefully and see how you think they fit together and what they mean.
Now let’s get to what’s happening with Tesla vehicle wait times for new buyers in China.
By Peter McGuthrie, courtesy of EVANNEX
As Tesla continues to prioritize production output at its Gigafactory Shanghai, the automaker’s wait times have been dropping in China as it begins catching back up to demand. Most investors know that China is an important market, and the shift to reduced wait times on electric vehicles may or may not be significant when considering the company’s share price.
Tesla’s wait times in China have dropped significantly in recent weeks, as reported by Barron’s, leaving some investors wondering how the automaker’s stock could be affected. Some of Tesla’s wait times in China were dropped by more than a month, with all models now bearing a minimum estimated delivery of just one week and a maximum of 10 weeks.
Before, the shortest wait time for a Tesla in China is with the entry-level Model Y, which estimated a delivery time ranging from one to four weeks. Now, all Model Y and Model 3 variants have estimated delivery times as low as one week.
The longest wait times for its models are the Model Y AWD Long Range and Model Y Performance, each with an estimated delivery ranging from 1 to 10 weeks — down from as much as 14 weeks earlier this week.
Tesla has dropped delivery estimates in China three separate times since completing its production upgrades. Additionally, 14 weeks is quite the improvement considering some of Tesla’s models were expected to take 20 weeks just last month.
The drop in wait times could indicate multiple different things for Tesla’s stock, and bulls and bears are likely to argue one way or the other. For one, many investors are looking at demand to help predict the market’s future, and falling wait times could point to a decrease in demand overall.
Still, the wait times began decreasing within a month of Tesla’s production upgrades at Giga Shanghai, and bulls are likely to debate that the drop represents this production increase and not a drop in demand — especially with Tesla’s impressive August delivery numbers. Additionally, Tesla’s Giga Shanghai became less strained with the ramp-up of production at Gigafactory Berlin-Brandenburg, since that factory can now accommodate European orders.
No matter which way you spin it, however, delivery expectations for much of the Chinese auto market — including EV startups and Tesla rivals Li Auto, NIO and XPeng Motors — significantly underperformed. Meanwhile, Tesla nearly doubled its total manufacturing potential worldwide between Gigafactories Shanghai and Berlin.
Only time will tell how Tesla’s reduced wait times will affect its stock, but consumers could also be incentivized to buy EVs with wait times that decreased by more than a month. According to statements made during Tesla’s second-quarter earnings call, CEO Elon Musk also seems to think that the drop in lead times is crucial, calling the automaker’s long backlog of orders “annoying” for customers.
“That’s annoying. It’d be like go to a restaurant and you order a burger and you have to wait 3 hours and like,” said Musk. “You want to get your burger right away. Same with the car. So we want that lead times to reduce.”
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