Tesla’s two factories in the United States suspended production due to the pandemic; NIO Inc. released its second car model – NIO U

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① Tesla’s Two Factories in the US shut down due to Epidemic

Tesla announced last week that due to the epidemic and local government requirements, its Fremont and New York factories will be officially closed on March 23.

As of last week, Tesla’s Gigafactory 1 in Nevada, retail centers, delivery service centers, and supercharging stations in the US will continue to operate.

In addition, Morgan Stanley analysts said that Tesla’s financial strength is sufficient to cope with several months of shutdown of its Fremont factory.

Commentary: Tesla is not the only automaker to shut down due to the epidemic. Before last Friday, Garage sorted out a list of automakers that had stopped production.

If factories are shut down without enough inventory, it will inevitably affect vehicle delivery and sales. Of course, automakers don’t just sit idle when they stop production. For example, General Motors’ previously shut-down Hamtramck plant in continue with the renovation plan and prepare for the production of electric vehicle models in the future.

In addition, Tesla’s Fremont factory will also be upgraded during the shutdown period to increase production capacity in the future. It seems that the automaker’s layout during the epidemic will result in lost production that will be recovered after the epidemic by increasing production capacity.

② NIO Releases 2019Q4 and Annual Report

Last week, NIO released its Q4 2019 financial report. The total deliveries in Q4 were 8,224, including 6,824 ES6s and 1,400 ES8s. This is a 72% increase from the 4,779 deliveries in Q3 2019.

The company had a yearly net loss of up to CNY 11.2957 billion. As of December 31, 2019, the remaining cash and cash equivalents, restricted currency funds and short-term investments of NIO were CNY 1.0563 billion.

During a conference call, Li Bin stated that improving gross profit margin is one of NIO’s core goals in 2020. NIO is confident to achieve a positive gross profit margin in Q2 and for the year-end, their goal is a double-digit gross profit margin.

Quick Comment: It seems that in 2019, NIO’s average quarterly losses reached CNY 2.5-2.8 billion. Currently, NIO’s balance sheet still has over 4 billion USD (approximately CNY 40 billion) due to the sales of 3 convertible bonds at the beginning of 2020. If gross profit margin improves this year and together with last year’s staff reduction plan, NIO’s quarterly losses can be reduced, and their 40 billion CNY can barely support them until Q2 this year.

The coronavirus outbreak at the beginning of this year has already impacted sales, as shown in the January insurance data. This year will be another difficult year for NIO. Whether it can turn the situation around depends on the financing framework agreement signed with the Hefei government of CNY 10 billion. It remains to be seen when the money will arrive.

③ Tesla Shanghai Giga Phase 2 starts construction

On Monday last week, Tesla Shanghai Giga Phase 2 has started construction. In addition, according to a report in Jiefang Daily last week, Tesla’s VP Tao Lin stated that “Tesla’s Shanghai capacity has exceeded the pre-virus level”.

The Shanghai Tesla Giga factory had a production capacity of approximately 2,000 vehicles per week at the end of 2019. Currently, the production capacity has surpassed the pre-virus level and will accelerate to achieve its target of an annual production of 150,000 vehicles by 2020.

Quick Comment: In the United States, the Model Y 5-seater version has already begun deliveries, while the 7-seater version may have to wait until next year. This time, the construction of Phase 2 of the Shanghai factory is also preparing for the production of the domestic Model Y. If all goes well, we will see the domestic Model Y at the latest by next year. Let’s boldly guess at the price.

In addition, due to the closure of Fremont and New York factories, the Shanghai factory’s standard range upgraded version of Model 3 may also be affected. The original plan to achieve 100% domestic production of Model 3 by the end of this year may need to accelerate.

Finally, BMW officially announced that the next generation BMW 7 Series will provide a pure electric version, with the fifth-generation BMW eDrive electric drive technology. In addition, there will be plug-in hybrid, gasoline and diesel versions. It is reported that the pure electric version of the 7 Series will use a 120 kWh lithium-ion battery with a range of more than 700 km.

The first model of BMW to attempt pure electric vehicles under the BMW brand is the BMW iX3, which is expected to be produced and sold globally in China this year. However, BMW recently confirmed that the iX3 will not be sold in the US.

Comment: Based on BMW’s recent financial report, BMW will increase its investment in new energy. The goal is to reach 25 new energy vehicle models by 2023, including nearly half of which are pure electric.

Last week, Volkswagen Group held its 2020 media conference and made a few key points:

In 2019, Volkswagen Group achieved a record high profit, with a 7.1% increase in global sales and a 1.3% increase in new car deliveries, reaching a total of 10.97 million vehicles. The Chinese market accounted for 40% of the total delivery volume, with a market share of 19.8% and a revenue of 4.4 billion euros.
Porsche as the profit champion of Volkswagen Group, its first pure electric car Taycan received 15,000 orders.* Audi sold 32,000 e-tron in 2019, which was launched in 2018. It won the first place in the high-end luxury electric car market in Germany and Norway, thanks to its excellent performance in the European market. In contrast, Model X had poor sales.
Finally, let’s look forward to 2020. Challenges facing the automotive market mainly come from the volatility of economic environment, intensifying competition, fluctuation of commodity and foreign exchange markets, and stricter carbon emission standards.

Quick view: From the revenue of €252.6 billion, Volkswagen has still made a lot of money in 2019. Although there are fines for the emission gate incident, the cash flow of the automotive business has still reached €10.8 billion. China market contributed the most, delivering a total of 4.23 million vehicles last year, accounting for nearly 20% of the market share, becoming the market with the highest global share.

In addition, Volkswagen’s layout in the electrification transformation is also strong. Previously, it was stated that €60 billion would be invested in research and development of hybrid, pure electric, and intelligent fields before 2024. The existing MEB and PEE electric platforms respectively target the mid- to low-end new energy vehicle market and the high-end new energy vehicle market. It can be seen that the Volkswagen Group still has a clear strategic layout.

Each brand under its umbrella has clear division of labor and positions in the future electrified era. So, do you think this traditional automotive giant, Volkswagen, has a good layout towards electrification transformation?

⑥ NIO launches its second model – NIO U

NIO U is positioned as a compact SUV with a body size of 453018601628 mm. There are two versions of the endurance, 400 km and 500 km, and six models with a price range of ¥139,800 to ¥199,800.

In terms of configuration, the mid-to-high end models are equipped with L2 level assisted driving, and the more impressive feature is that the perception chip uses the Mobileye EyeQ4 chip. However, the official said that assisted driving and automatic parking will not be available until the OTA update on June 30.“Transparent A-pillar” is a highlight in the interior. The company hopes to reduce blind spots by creating a virtual A-pillar effect through adding a display screen on the A-pillar.

Quick Comments: Looking at NETA U’s pricing, it will compete directly with models such as the XPeng G3, the WM EX5, and the BYD Song Pro.

In addition, the company has launched a car purchase deal with a “5-year return of 50,000 yuan” discount, but this is only limited to NETA 520U Creative Edition. A maximum of RMB 10,000 can be refunded each year, with a total refund of up to RMB 50,000. Therefore, the NETA 520U Creative Edition priced at RMB 179,800 will become the main model. Do you like NETA U?

Written and edited by Changhao Lewis.