The global auto behemoth is making big moves in the world’s largest auto market.
Tesla has started a massive marketing campaign in China. After building Gigafactory 3 (the plant belongs to the wholly-owned Tesla's subsidiary, comprising the whole production cycle) in Shanghai, the car maker is aiming at broader consumer groups by offering car loans with a 0% interest rate.
Previously, the company announced that the starting price of Tesla Model 3 assembled in the Shanghai plant will be CNY 328,000 (USD 47,500). The new factory will have enough capacity to produce 500,000 vehicles per year. This number is close to the amount of battery electric vehicles sold in China in 2017 -- 579,000.
As web tech portal Liangziwei (量子位) reported with reference to Tesla's official Weibo account, the global EV pioneer is taking the market penetration issue seriously this time: interest-free car loans will be provided for all Chinese citizens, while the credit period duration will vary from one to five years, depending on the province issuing the license plate for a particular car.
In a nutshell, the new car loan regime for Beijing looks as follows: on the date of purchase, a Model 3 buyer is charged CNY 120,000 (USD 17,400) -- this amount is considered as a cash deposit that will be paid back once the final payment against credit is made. As for the regular payments, the customer will have to transfer CNY 11,700 (USD 1,700) every month over the three years of the contract.
Although direct labor cost is supposed to be significantly lower in China, the company might still encounter deep short-term losses in the new market. A few days ago, He Xiaopeng, founder and chairman of Xpeng Motors, publicly expressed doubts about the local competitiveness of Tesla Model 3. However, the American EV giant seems to have bigger levers than all its local competitors. It can always resort to dumping, relying on the brand and other market advantages.
China is currently holding a 56% market share in the global electric-vehicle market with more than 1 million units sold in 2018. Check out how and why the sector has been growing in the country.