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Why #Tesla needs to double/quadruple down in #China now by increasing EV production, FSD dev; starting RoboTaxi & insurance!
#elonmusk, 4X in China will greatly accelerate transition to sustainable energy and cement Tesla’s leadership.
#elonmusk, 4X in China will greatly accelerate transition to sustainable energy and cement Tesla’s leadership.
The biggest risks for Tesla are: producing quickly to meet demand & lowering price before competitors catch up. 4X in China will mitigate these risks.
Pls kindly consider this w/ your newly raised capital. You said Tesla will spend money ASAP. IMO this will be the best return.
Pls kindly consider this w/ your newly raised capital. You said Tesla will spend money ASAP. IMO this will be the best return.
A side benefit: if this plan happens in 2021, Tesla’s future will be so secured & become obvious to others, $TSLA will 5X to $3000 in 2022 if not 2021.
Below is a long, quick writing of my thoughts, inputs & comments are welcome!
Below is a long, quick writing of my thoughts, inputs & comments are welcome!
I. What do I mean 4X in China:
1. 2X or 3X Shanghai GF3 capacity: 1 mil to 2-3 mil, with 4680 battery capacity. Start in Q1, complete in Q4'21.
2. Build a new Tera Factory in southern (ie Guangdong) or western (ie Sichuan Chengdu) China, targeting 2-3 mil , complete in Q1'22.
1. 2X or 3X Shanghai GF3 capacity: 1 mil to 2-3 mil, with 4680 battery capacity. Start in Q1, complete in Q4'21.
2. Build a new Tera Factory in southern (ie Guangdong) or western (ie Sichuan Chengdu) China, targeting 2-3 mil , complete in Q1'22.
3. Start a RoboTaxi service (with human assist) in 1H 2021, collect data & improve FSD in China. Secure China’s collaboration & approval on data collection & FSD in China.
Tesla can not afford not do FSD or Robo Taxi in China.
Tesla can not afford not do FSD or Robo Taxi in China.
Tesla needs to comply with China data laws, and does not want to be excluded to collect local FSD data in China. A win win can be achieved here.
4. Greatly expand R&D in China to accelerate $25K Model 2, & manage FSD China data collection & dev.
4. Greatly expand R&D in China to accelerate $25K Model 2, & manage FSD China data collection & dev.
5. Start collaborating with Chinese companies on solar and energy storage.
6. Invest in booming China EV & battery supply chain to secure future capacity. This is not optional & must be done ASAP! It is going to be like land grab!
6. Invest in booming China EV & battery supply chain to secure future capacity. This is not optional & must be done ASAP! It is going to be like land grab!
7. Start insurance company (Tesla might have to partner with a Chinese partner, due to sensitive personal data) in China ASAP, since now the China opens up its insurance market
II. Why I think the above is critical to further accelerate #Tesla’s mission & leadership:
Tesla’s tech & advanced manufacturing + China’s speed, competitive cost & EV supply chain, nobody else, even Tesla in other areas will able to beat the price.
Tesla’s tech & advanced manufacturing + China’s speed, competitive cost & EV supply chain, nobody else, even Tesla in other areas will able to beat the price.
Lower cost will help accelerate the transition to sustainable energy - surprisingly Tesla & Chinese government are highly aligned on this goal.
1. China’s market size & potential, this is not only auto.
- China Auto market:
- 2nd largest economy.
- Predicted 850 million middle class increase from 2009 to 2030 https://www.smh.com.au/opinion/the-killer-fact-about-the-chinese-middle-class-20170726-gxj1z7.html
- #1 Auto market, 25 mil cars sold in 2020, 30 mil projected in 2025.
- China Auto market:
- 2nd largest economy.
- Predicted 850 million middle class increase from 2009 to 2030 https://www.smh.com.au/opinion/the-killer-fact-about-the-chinese-middle-class-20170726-gxj1z7.html
- #1 Auto market, 25 mil cars sold in 2020, 30 mil projected in 2025.
- China gov targets 20% EV of all cars sold in 2025 (>6 mil), but I think this is way too conservative. We might see 5 mil annual China EV sales in 2023.
- Having enough capacity right in this market is critical & will save cost shipping cars from else where.
- Having enough capacity right in this market is critical & will save cost shipping cars from else where.
- Plus it is convenient to export EVs from China to Japan, South Korea, South East Asia, India, Europe & even US, through ship or high speed cargo trains.
- China Green energy Market:
- To fight pollution, China has invested vastly in green energy & tripled EV & energy incentives this year.
- Energy storage & solar market potential is huge for Tesla!
- To fight pollution, China has invested vastly in green energy & tripled EV & energy incentives this year.
- Energy storage & solar market potential is huge for Tesla!
- China Robotaxi market:
- Needless to say, with 1.4 Billion people, robo taxi market will be huge in China, a few times of any other market.
- Needless to say, with 1.4 Billion people, robo taxi market will be huge in China, a few times of any other market.
- China Insurance Market:
- China just opened up insurance industry in Dec 2020, huge opportunity.
- With more Tesla on the road in China, data & AI based auto insurance could be another huge opportunity. http://www.xinhuanet.com/english/2019-10/15/c_138473764.htm
- China just opened up insurance industry in Dec 2020, huge opportunity.
- With more Tesla on the road in China, data & AI based auto insurance could be another huge opportunity. http://www.xinhuanet.com/english/2019-10/15/c_138473764.htm
2. China Speed + Competitive Cost + Supply China Integration
- I think many will agree Shanghai GF 3 & 2020 China Sales played a huge part in derisking Tesla & proving EV demand, directly contributing to the 10X $TSLA stock shoot up.
- I think many will agree Shanghai GF 3 & 2020 China Sales played a huge part in derisking Tesla & proving EV demand, directly contributing to the 10X $TSLA stock shoot up.
It also set a role model for Berlin & Austin, on how fast a factory could be built 24x7x365, & how red tapes get removed.
- I summarize Tesla’s success recipe as: disruptive tech + fast execution + competitive cost + FSD data asset + SW, while China complement almost all areas;
- I summarize Tesla’s success recipe as: disruptive tech + fast execution + competitive cost + FSD data asset + SW, while China complement almost all areas;
- Fast pace execution speed in factory & Super Chargers. Tesla opened 27 V3 charging stations 219 stalls on Oct 24, in one day! https://www.tesmanian.com/blogs/tesmanian-blog/tesla-has-opened-27-supercharging-in-china-in-the-last-24-hours?_pos=1&_sid=027c93808&_ss=r
- Competitive labor cost.
- Educated, disciplined work force. Since many large auto OEMs already produced autos in China for 10+ years, China has well trained auto workers & designers.
- Educated, disciplined work force. Since many large auto OEMs already produced autos in China for 10+ years, China has well trained auto workers & designers.
- Supply Chain. I believe this will be a big driver Tesla needs to have an oversized EV capacity in China, and will benefit from it greatly!
- It’s worth comparing to the Apple’s supply chain in China.
- It’s worth comparing to the Apple’s supply chain in China.
While most iPhones are assembled in China, majority of its key parts were initially supplied by SK & Japan. China supply chain did increase the share over the years, we will see a major change in the next 1-2 years as China supplies will supply OLED & more advanced parts.
- However, EV supply chain is very different since the beginning. Both Japan and SK are so reluctant to move from ICE to EV, while China went all in EV, so its EV supply chain got built out quickly and plays a much bigger role from the get go.
- For example, emerging battery manufacturer by CATL has a market cap of 100B USD! That is same as GE, could rank 23 in S&P 500, while I have not heard the company until last year, even though I have many friends in China & go to China 5-6 time a year. Talking about emerging!
- Other China EV players like BYD, NIO, Xpeng, Li and Wuling (GM partner) will also drive the supply chain innovation & efficiency. They are well funded and have the right mindset to compete market share with ICE instead of Tesla.
They will help drive down the supply chain cost, and drive differentiating innovations which will benefit Tesla. Again, think Apple, many of the new iPhone features were on competitive Chinese phones long before iPhone, this helps Apple experiment & learn.
- European OEMs, except VW and Volvo (Polestar), are just starting to move to EV reluctantly. Note Volvo is owned by Chinese company Geely. All OEMs manufactures in China.
- Without access and be close to the EV supply chain in China, it will be hard to compete in the future. This could apply to Berlin & Austin as well, the cost will be higher inevitably.
- China has a lot of AI & SW talent Tesla can tap into for local development.
- China has a lot of AI & SW talent Tesla can tap into for local development.
- FSD data acquisition and localization.
- I think we all agree gathering FSD data (road, driving habits) is critical for Tesla to succeed in China.
- I think we all agree gathering FSD data (road, driving habits) is critical for Tesla to succeed in China.
However, there is a big potential risk (if not happening already), China government will not allow Tesla to collect FSD data in China and bring them outside of China, just like US & EU will not for data protection, as well as AI protection.
- I see that could become a roadblock if Tesla does not preempt the concern. Who owns the data, the data has to be stored in China not outside of China etc.
- Data is the electricity (I don’t want to say oil) to AI. It is important Tesla comply with China law, and collaborate on this for the bigger good of sustainable energy, instead of falling into the political traps or debates, which is too small comparing with climate change.
- More data, better FSD for China. Tesla can not afford not to have FSD work in China; China does not need to fence off Tesla, as FSD will help China to reduce accidents & save lives.
2. Government policy (Support carbon neutral, EV, AI adoption); Chinese more sensitive to green & environment protection
- Transportation: China has long viewed transportation as foundation for economy and social stability.
- Transportation: China has long viewed transportation as foundation for economy and social stability.
There is a famous saying after China opened up market from 1978, “if a town want to get rich, first build road (要想富，先修路).” By the end of 2018, China has 5mil km roads, including 143,000 KMs highways.
- China is clearly one of the the most aggressive EV adopters, and will remain for its own benefits: protect environment and grow green industry.
- EV charging infrastructure, 43000 stations in China already, 526 battery swap stations as of 2020.
- EV charging infrastructure, 43000 stations in China already, 526 battery swap stations as of 2020.
- Environment protection:
- Emerging emphasis from both governance and people on protection the environment (绿水青山Lucid waters and lush mountains),
- Chinese, especially in big cities, are much more sensitive to environment protection and love EVs, especially Tesla.
- Emerging emphasis from both governance and people on protection the environment (绿水青山Lucid waters and lush mountains),
- Chinese, especially in big cities, are much more sensitive to environment protection and love EVs, especially Tesla.
China policy makers have corrected policy only valuing economy growth speed, and now value growth quality and environment protection much more.
- China is more open & friendly to AI apps, including FSD, China is the largest test ground for pioneering AI apps. (Link News: AI in new Beijing Airport).
This is very important, as China could be among the first a few countries to approve full FSD.
This is very important, as China could be among the first a few countries to approve full FSD.
3. This is the elephant in the room: in contrary to many thinks, I don’t believe China will hurt Tesla in the near or far future.
- If you don’t believe me, just look at Apple. With all the trade wars since 2018, China still did not ban or even hurt apple while they could.
- If you don’t believe me, just look at Apple. With all the trade wars since 2018, China still did not ban or even hurt apple while they could.
Why? Since Apple benefits China’s employment, bring joy to people, but much more important, it helps grow the smart phone supply chain & competitors like #Huawei #Xiaomi #Oppo. After #Apple, the next a few big smart phone players are all Chinese.
Even #Samsung is fading, and getting harder to compete with Chinese companies’ innovation, speed & lower cost.
- No, China does not need to kill Apple or Tesla at all, it only need to have a group of companies after Tesla & Apple, to better compete with other competitors in this huge market.
- Chinese government is very smart to invite Tesla in China, give it the privilege as 100% owned foreign auto company (before Tesla, any foreign auto company in China has to give 50% to local partners), Why?
To use Tesla as a big white shark to set the gold standard, stimulate the local companies to compete, evolve, and grow the whole EV supply chain.
- As I mentioned above, China EV supply chain is already leading and very competitive, both in tech & price. It has a good chance to own a big part of the EV supply chain, with its market, technology, speed and cost power.
- Elon publicly appraised 'smart, hardworking' people in China, also twittered out China’s Moon probe/soil sampler mission, so clearly he does value his good relationship with China. This is again critical to Tesla’s mission of accelerating sustainable energy!
- China will be happy to have an innovative leader like Tesla, which will help China’s goal in environment and building up a monster EV and green energy supply chain!
Tesla (tech) + China (market, speed, cost, supply Chain, green trend, data, AI talent) would greatly accelerate Tesla’s success, achieving 1+1>2 or even 1+1 > 5.
It will the fastest innovation + fastest to build + fastest to market.
It will the fastest innovation + fastest to build + fastest to market.
III. Implications to $TSLA
- The above plan could accelerate 2-3 years for Tesla to produce 5+ mil EVs as early as 2023
- The above plan could accelerate 2-3 years for Tesla to produce 5+ mil EVs as early as 2023
- Tesla’s FSD will work well in China, with locally collected data & developed SW
- More importantly, with more cars on the road & produced at lower price, RoboTaxi will come to reality much much faster
- More importantly, with more cars on the road & produced at lower price, RoboTaxi will come to reality much much faster
- The biggest risk for Tesla is: can it produce enough cars quickly to capture the market, & lower the price before competitors can catch up. 4X in China is the key to make that happen! If this happens in 2021, $TSLA will 5X to $3000 in 2022 if not 2021.
Disclaimer: the above thread is my opinion only, not financial advice, pls do your own research:)
