According to Tesla's official Weibo account, the newly-signed Tesla Energy Super Factory in Shanghai Lingang has started recruiting.
Tesla employees revealed that a frontline ordinary worker earns a monthly basic salary of over RMB 5,000 (USD 727), and other income includes bonuses, allowances, overtime pay, etc. They receive 17 months of salary per year, with an average monthly income of nearly RMB 10,000 (USD 1,454). In addition, there is a 7% social security contribution, a 5% housing provident fund, as well as free work meals, free shuttle buses, and free family commercial insurance, etc. Tesla insiders said that employees eat at the company cafeteria, and housing is provided by the company in the form of public rental housing. Everyone, including workers, has stock options or cash. In Lingang New City, which is far from the city center and has a relatively low cost of living, this treatment is quite attractive.
However, workers at the adjacent vehicle factory don't have it as good. According to a Reuters report on 17th April, workers at the Shanghai Super Factory were informed last weekend that their quarterly performance bonus would be reduced, due to a fatal welding accident that occurred in the Shanghai factory's welding workshop in February. Some dissatisfied comments subsequently appeared on domestic social media platforms like Baidu Tieba and on overseas Twitter, with posters mentioning @Tesla CEO Musk and his mother, Maye Musk, hoping to draw attention and get answers. Musk said on Twitter that he had received relevant alerts and was paying attention and investigating.
It is hard for some labor experts to understand why performance bonuses are being cut in response to a production accident, which also reflects Tesla's profit pressure. Despite repeatedly wielding the price-cutting stick and insisting that profits are still considerable, Tesla still faces multiple hidden worries.
According to a survey of 17 analysts by Visible Alpha, Tesla's gross margin for cars in the current quarter is expected to be 23.2%, lower than the record-setting 32.9% in the same period last year, and the lowest level since the fourth quarter of 2019. It is understood that since the beginning of this year, Tesla has carried out multiple price cuts in global markets, including the United States, Europe, and China, to boost consumer demand. In the U.S. market, Tesla has undergone five rounds of price cuts, affected by the government's tightening of tax incentives for electric car purchases. In terms of models, the starting price of the popular Model Y has been reduced by 24% since January this year. Such a large reduction in price within about three months is very rare.
The increase in Tesla's sales is evident as it continues to break sales records and appears on the lists of the most popular cars in multiple countries worldwide. However, for the crucial Chinese market, where demand has been weakened by the economic impact of the pandemic and consumer downgrading, soft challenges are among the long-term challenges that car manufacturers will face. Depending solely on price reductions may force competitors into a corner, but it would also create a negative perception of Tesla. On the one hand, multiple price cuts in a short period of time have caused general dissatisfaction among Chinese car owners, and the criticism of "harvesting leeks" has shaken consumers' willingness to buy Tesla cars. On the other hand, price cuts are easy to implement, but price increases are difficult. If profit margins are significantly affected, or if there are fluctuations in the prices of raw materials and other commodities, Tesla, which aims to improve prices to cover costs, will face a dilemma.
Tesla is not entirely lacking confidence in reducing prices. China's lithium prices have plummeted faster than expected this year, down 34% in just the past four weeks, as the decline in demand for electric vehicles in the Chinese market has led to an accumulation of lithium metal stocks. According to Fastmarkets' assessment, the spot price of lithium carbonate fell to RMB 260,000 (USD 37,804) per ton at the end of March, less than half of the price quoted in November last year.
In terms of competitors, leading Chinese new energy vehicle companies are also attempting to be forced into a price war with Tesla. However, due to the difficulty of effectively researching and developing, as well as the cost of marketing, except for BYD (CHINESE: 比亚迪), no pure electric vehicle company has yet become profitable, and even NIO (CHINESE: 蔚来) is in a "buy one, lose one" state. In an environment where Tesla is using its profit margins to push for product price cuts, Chinese car companies lacking external funding and brand power will inevitably collapse, and survivors will consider seizing the mid-to-high-end electric vehicle market and attracting former fuel car users of BBA (Mercedes-Benz, BMW, and Audi) to their brand. BYD's urgent launch of the Yinlong series this year is a typical example. In addition, Volkswagen's strong move to focus on the ID series this year is also worth watching, as the matrix of A-class, B-class sedans, compact SUVs, and mid-to-large SUVs have basically been formed.
It is foreseeable that to compete with leading Chinese car companies as much as possible, Tesla will control its costs to the extreme. As long as it is advantageous to the market share, Tesla will have enough motivation to do so, even if it might further compress its profit margins. Moreover, the completion of the Shanghai energy storage plant and the self-sufficiency of batteries in the future will undoubtedly be a huge boost for Tesla's cost strategy.
At this critical stage, the ESG2023 "the US Sub-Forum" will be held in Shenzhen on June 2, 2023. EqualOcean will invite the representatives of academic institutions and investment institutions, as well as company leaders, from the International Studies Institute of Fudan University, Sun Yat-sen University, Jinan University School of International Relations, Gaorong Capital, Vision Plus Capital, FreeS Fund, ZWC Partners, Source Code Capital, Niu Technologies, TikTok, SHEIN, NEIWAI, miHoYo, Tuya, MINISO, Dreame, Ecovacs, WYBOTICS, Lifen, and UniUni.EqualOcean analysts will also release the US Report 2023 at the US Sub-Forum, summarizing business opportunities and best practices for expanding into the US market in the new stage. Click the link to apply and scan the QR code below to learn more about ESG2023.
