, 9 tweets, 3 min read Read on Twitter
1) $TSLA's Model 3 appears to be a flop in China, the world's largest EV market, where $TSLA plans to locally produce the M3 in Q4. Avg monthly sales btwn Jan~June were only 2.7K units/month vs 6.3K/month in Europe & 11.3K in the US.
2) The M3's weak China sales are due to intense competition from local players. Things look set to get worse w/ NIO's ramp-up of its new ES6 SUV, which is forecast to sell 6.5K in both Q3 & Q4. NIO expects total deliveries of 15K in Q4, which is nearly 2x M3 deliveries in Q2.
3) NIO's ES6 has faster acceleration, more interior space, good smart features, & nearly as much range as $TSLA's Model 3. One key difference: NIO's top-end ES6 is $11,000 cheaper (after $3.6K EV subsidies) than the Model 3 P. Also, it's an SUV, which Chinese prefer over sedans.
4) Which brings us to the prospects of $TSLA's Shanghai GF3, which is set to start output in Q4 (don't hold your breath, though). This thread by @phoennix10 implies total equipment capex of $1.3bn for GF3, assuming 150K/year in output.

5) In $TSLA's 2018 10-K on pg-92, they claim the productive life of Model 3 tooling is 1m units. This implies a depreciation schedule of 6.6 years at GF3. So right off the bat, excluding yield problems, etc., GF3 should see at least $200m of depreciation. Then there's demand.
6) With only 2.7K/month in Model 3 sales so far this year, the Model 3 is nearly insignificant in China's EV market. With more new EVs set to flood the market in 2020, it's hard to see how the locally produced M3 will sell w/out a price cut. The RMB 328K price tag is too high.
7) The China-made M3 price of Y328K ($46K), is 20% higher than the price in the US, despite much lower labor & supply costs in China. It's exactly the same price of the imported SR+, if Autopilot is included. Does @elonmusk really think the Chinese are that stupid?
8) As $TSLA most likely fumbles to ramp up M3 output in China in Q4, NIO's ES6 will be in full production & waves of new EVs will be hitting the Chinese market. If the Chinese aren't buying the Model 3 now, why should they buy the China-made version at such a high price?
9) $TSLA will need to lower the China-made price below that of the US price of $39K. Chinese most likely will demand this, as rival offerings are as attractive--both in performance & smart features these days--which means a price tag of Y273K at most, or a 17% price cut.
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