On July 17, 2019, Tesla China held a media briefing in Shanghai. The management team made a comprehensive and complete release of information about Tesla China’s 2019 plan.
Today, Tesla China General Manager, Wang Hao, Tesla Vice President of External Affairs, Tao Lin, Tesla China Service General Manager, Xue Juncheng and Tesla East China Regional General Manager, Gong Ling, were interviewed by 42HOW in Shanghai.
The sales and operations, government affairs/public relations/marketing and branding, charging, and after-sales service leaders of Tesla China were all present to publicly make transparent Tesla China’s development strategy, sales and service policies. This is just like Elon Musk, Tesla’s public relations officer responsible for Twitter, across the ocean.
Supercharging network doubled, service centers doubled
With the official entry of Model 3 into China in Q1, Tesla China’s sales increased by more than 300% year-on-year. With this came huge challenges for Tesla’s supercharging station network and service centers, which were in high demand. The rapid growth of Tesla’s ownership has had a serious negative impact on the company’s service experience.
At the communication meeting today, Xue Juncheng stated that as of 2019, Tesla has laid out 69 of its own body spraying centers, 2 PDI centers and 29 service centers in China. In 2019, Tesla will expand to add 2 new PDI centers for repair and delivery, 50 body spraying centers and 34 service centers, with a year-on-year increase of over 100%.
In terms of the supercharging network, as of 2019, Tesla has 214 supercharging stations with 1486 supercharging piles in mainland China. In 2019, Tesla will build 148 new supercharging stations, with a total of 1162 supercharging piles, a year-on-year increase of 79%.
From the PPT schedule point of view, both the service & body spraying center expansion and the supercharging network expansion of the 2019 plan’s completion rate are less than 50%, which has brought huge challenges to Xue Juncheng’s team.
Xue Juncheng mentioned that the slogan of Tesla’s supercharging construction team is “make charging easy everywhere“. The team’s goal is to completely eliminate the charging anxiety of users without private charging piles through the efforts of engineering and technology teams.In the specific implementation process, this goal will be achieved through two main paths. First is the technical aspect, and the V3 Supercharger with a peak power of 250 KW is expected to significantly enhance the long-distance travel experience. Xue Jianjun mentioned that the V3 Supercharger is expected to be available in China by the end of this year. Secondly, in terms of charging layout strategy, Tesla will continue to focus on the layout of private chargers and destination chargers to improve and balance the charging supply and demand level, and enhance the user experience.
Regarding the Supercharger itself, the layout logic will follow two parts of increasing the network density of existing cities and expanding into new cities. Taking Shanghai as an example, as of now, Tesla has built seven Supercharger stations with a total of 264 charging stalls. However, with the rapid growth of Tesla’s ownership, the Supercharger network density will continue to increase.
For cities with lower ownership rate of Tesla, the expansion of Tesla’s charging and service capabilities will be significantly faster than that of sales stores based on user experience.
As for the service system, Tesla has a widely circulated guiding principle called “The Best Service is No Service,” where “No Service” does not mean no service, but refers to “invisible service.”
The landing of services is also achieved through technological and mode innovation. From a technical perspective, the whole-car OTA update is entrusted with important responsibilities. “Invisible services” mean that Tesla will support the maximum number of remote detections of the performance of each component from the R&D level. By pushing updates in advance before the problems occur and resolving and fixing them through OTA, the problem can be solved “before the user discovers it.”
For hardware faults that cannot be resolved by updating the software system, Tesla has established dozens of fast repair service centers and established mobile service teams in most cities where Tesla’s ownership is high. Users can make appointments through the Tesla App to complete maintenance during work/travel/shopping or other activities.
Whether it’s a software or hardware issue, Tesla is trying to avoid the traditional model of problem-solving by visiting a physical store as much as possible. Xue Jianjun said this is the guiding principle that Elon Musk has set for service: “Users’ time is priceless, and the best service is invisible service.”
Of course, due to the insufficiently responsive US software engineering team, the expansion of the service center has not matched the growth of ownership, and the current user experience is still not ideal. The concept is not a problem, but the burden of landing is on Xue Jianjun’s team.
Let’s look forward to the improvement of the Tesla service experience.
Continuous price cuts, fluctuating prices?## The Most Controversial Issue Regarding Tesla in China
The most controversial issue for Tesla in China this year is the repeated price adjustments since the Model 3 launched in the Chinese market, including several price increases. The pricing strategy has seriously hit the brand loyalty of new Tesla users and made potential users hesitate and wait.
We need an explanation.
Tao Lin said that every adjustment in Tesla’s pricing is highly tied to exchange rates, tariffs, manufacturing costs, and reasonable financial indicators. It is based on an extremely scientific and rational pricing logic, which is absolutely not impulsive.
Wang Hao said that Tesla attaches great importance to the Chinese market, the world’s largest automobile market. Who dares to deceive Chinese consumers? Nobody dares to say so.
The fundamental reason is that Tesla’s direct and highly transparent pricing system causes any small price adjustment to attract high attention from users and potential consumer groups. And Tesla insists on an extreme pricing strategy, so slight changes in the above factors (exchange rates, tariffs, and manufacturing costs) inevitably lead to price adjustments, which ultimately conflict with consumer perception.
In contrast, most consumers’ concerns about traditional car companies are focused on the official guide price, but many car purchase guide apps provide actual transaction prices. The “actual transaction price” is always changing, but the “official guide price” will never change, which largely mitigates users’ dissatisfaction with price adjustments.
In addition, OTA for whole vehicle is now demonized by public opinion as a tool for “incomplete product testing, delivery first, and then supplementing defects”. But in Tesla, whole vehicle OTA brings substantial performance improvements to users.
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In October 2017, Tesla pushed an OTA update that shortened the Model S 75D’s 0-60 mph acceleration from 5.2s to 4.2s, and the Model X 75D from 6.0s to 4.9s.
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In March 2019, Tesla pushed an OTA update that improved the Model 3’s official EPA range from 310 miles to 325 miles.
For example, with the latest price adjustment that was just completed yesterday, Tesla announced that all Model S/X 75D models are sold out and that the upgraded range of the Model 3 Standard Range Plus will be increased to NEDC 480km by energy efficiency optimization. This means that the worst range performance for Tesla’s entire product line in China has reached NEDC 480km.
These ongoing optimizations and OTAs will bring real performance and value improvements, but Tesla has pushed them all to all owners for free.As a Tesla owner, I have a suggestion for Tesla China: Tesla’s price adjustments have repeatedly sparked widespread discussion. Since Tesla has underlying logic for each adjustment, it is suggested to directly disclose the reasons for the adjustments to the public, which fits the highly transparent culture advocated by Tesla.
Tesla in China
The localization of Tesla is also a matter of great concern for Chinese car owners.
On October 18, 2017, Tesla established its first overseas R&D center in Beijing. On July 12, 2018, Tesla CEO Elon Musk announced plans to gradually expand the scale of the Beijing R&D center, with a projected team of over 100 members by 2020.
Considered the Autopilot team is only about 300 people, Tesla Beijing R&D center is clearly entrusted with heavy responsibilities. According to Wang Hao, the Beijing R&D center has recently launched, with the core function of achieving Tesla’s localization. Regarding whether to access underlying data from Amap or Baidu maps in the future, Wang Hao’s response is as follows:
The demands of Chinese consumers differ from those in the United States. Our relevant localization work is in progress, and Tesla vehicles will gradually have mainstream applications and software that Chinese users use.
Wang Hao specifically mentioned the progress of the Chinese factory. Vice President of Tesla Global and President of Greater China Region, Zhu Xiaotong, is responsible for leading the progress of the factory’s construction and reporting directly to Elon. Additionally, in order to improve decision-making and execution efficiency, Tesla recently restructured the Asia-Pacific region and established the Greater China region, investing more resources to serve customers.
In fact, the construction progress of the factory has exceeded the expected speed in each dimension. As for the models produced, Wang Hao stated that the standard range enhancement version would be produced in the first phase, but “all production plans are not set in stone and will be adjusted at any time according to the market.”
Finally, how does Tesla view the Chinese market? The answer is provided by Wang Hao and summarized by 42HOW:
Based on the natural flow of visitors to the stores, ordinary consumers’ understanding of Tesla is no different from five years ago. Some people may say that this is just an electric car brand, nothing more. Consumers also ask why buy a Tesla? Because electric cars have license plates.
This statement is completely wrong, and the value of Tesla’s products can never be a speculative result of policy bonuses. This indicates that our market education and user education are far from enough. We should promote the intelligent electric vehicle industry more.It doesn’t have to be Tesla, we hope all new car manufacturers are doing well, even though they have been ahead of us, we understand it’s for promotion. Our competitor is the annual production and sales of 30 million gasoline vehicles.
For Tesla China, we spare no effort, no matter how fast we move, it is not fast enough. China’s market must surpass the United States and become Tesla’s largest market in the world, this is our goal.
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This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.