Introduction

Tesla cannot afford to lose the Chinese market, but the Chinese market doesn't care who wins or loses.

"Yet, I still choose Tesla."

Not long ago, under an article analyzing the current landscape of the domestic pure electric passenger car market and pointing out Tesla's situation, the usual 'chanting' responses appeared again in the comments section of a Commune post.

Figure| Let's be honest, it's 2024 now. Who doesn't have some expertise in energy consumption and battery management? Except for a few models jokingly referred to as 'electric Luxgen,' most electric cars consume around 15~20kW per 100km, with no qualitative differences.

Despite the article being well-argued and pinpointing Tesla's current issues in the domestic market,

Author Teacher Cui even preemptively addressed potential criticisms in the article's conclusion, anticipating readers would question the tone and chant the famous line, 'Never won online, but never lost in sales.'

It's unrefutable, yet frustrating, especially when the rebuttal is anticipated and 'sealed off'... So, what's the solution? Is it really that difficult to acknowledge the obvious facts besides just 'chanting'?

As of now, Tesla's remaining 'advantage'

While we must address the facts, some truths cannot be ignored or denied, or we'd be no different from internet trolls.

So, let's briefly recall when Tesla first introduced its entry-level Model 3 to the market. What were your initial thoughts?

I can confidently admit that, eight years later, I still vividly recall the awe-inspiring launch event I stayed up late to watch on March 31, 2016. An electric car priced at just $35,000 could be this impressive?!

Figure| Recall when Tesla unveiled the Model 3 in early 2016, its performance and price were unparalleled.

The performance specs of the first batch of Model 3s are readily available online, so I won't go into detail here. But I must ask, at that time, how did Tesla's competitors in the domestic market stack up?

For example, a certain brand updated its first-generation B-segment pure electric sedan in February 2017, featuring a new infotainment system, increased battery capacity to 62kWh, with a NEDC range of 352km, a high-end motor power of 135kW, 0-100km/h acceleration in 10.5 seconds, and a top speed limited to 150km/h.

Then, in July 2017, another brand unveiled an A-segment new energy sedan equipped with a 47.5kWh battery, NEDC range of 300km, motor power of 160kW, 0-100km/h acceleration in 7.9 seconds, and a top speed also limited to 150km/h.

Clearly, compared to the Model 3, which began mass deliveries at the end of July 2017, these competitors were lagging behind. Even new energy vehicles that could compete with the Model 3 in terms of performance didn't arrive until four months after the first Model 3 deliveries.

Figure| A significant first-mover advantage, but slow product rollout led to mediocrity – a common theme among Tesla models over the past six years.

More importantly, there's the price factor. The A-segment sedan mentioned above had a starting price of 235,900 yuan, while the B-segment model started at 369,800 yuan. Comparable pure electric mid-to-large SUVs were priced at 448,000 yuan. In contrast, the Model 3's pre-sale price was just $35,000, equivalent to roughly 226,000 yuan at the time.

While these are historical facts, it's also undeniable that both the Model 3, launched eight and a half years ago, and the Model Y, sharing the same platform and delivered since spring 2021, have seen minimal changes in configuration and performance from the latest models to previous years as of September 2024.

The Model Y mainly differs in minor aesthetic changes like carbon fiber trim on the door panels, while changes to the Model 3, like the mid-cycle refresh that replaced the headlights but also removed the physical gear shift lever, requiring shifting via the touchscreen.

Figure| Electronic shifting was first seen in the Model S refresh. In summary... the idea is good, but please, for the love of all that's holy, let's not do it again!

Meanwhile, all of Tesla's former competitors, whom it once trounced, have made significant strides in the past seven years. Even newer brands that emerged later started from a higher baseline and have been relentless in iterating and upgrading.

Many dismissively label this progress as 'convoluted competition,' but its effectiveness is undeniable. Anyone can walk into a dealership, check out the interior and features of a 200,000 yuan domestic pure electric vehicle, and take it for a test drive.

If we must pinpoint Tesla's strengths in 2024, it may not offer the most equitable pricing for both new and existing customers, but it certainly excels in model updates.

Figure| If you're tired of the rapid model updates seen in domestic new energy vehicles, reminiscent of consumer electronics, Tesla might be a good choice – buying now or a few years later won't make much difference.

After all, compared to domestic brands that can release two facelifts and one mid-cycle refresh annually, the Model Y delivered from Tesla's Lingang Gigafactory in 2022 is nearly indistinguishable from current models, even to professionals.

Fading Technological Glamour

In fact, the technological glamour surrounding Tesla was also laced with hyperbole. For instance, when Tesla's domestic models first launched, many self-media outlets hyped up its motor technology, praising its self-developed third-generation motors for their exceptional performance and energy efficiency.

Unfortunately, this praise must end as of March 3, 2023, at least in terms of energy efficiency. That's when Tesla officially announced its shift away from permanent magnet motors to induction motors.

The primary difference between induction and permanent magnet motors lies in the rotor, which uses coils instead of rare-earth permanent magnets. Naturally, this results in slightly higher energy consumption.

The reason behind Tesla's decision is straightforward – high-performance permanent magnet motors rely on rare-earth elements, which are in short supply.

Amid growing tensions between the US and China over technology and supply chains, maintaining a significant manufacturing hub like the Lingang Gigafactory in China, as an American manufacturer, is politically fraught in the US. What if a significant event disrupts rare-earth supplies?

Clearly, Musk made this decision with contingency planning in mind.

Figure| Induction motors inevitably consume more energy than Chinese competitors using permanent magnet motors, leading Tesla to default to 'one-pedal' mode in low-end models equipped with LFP batteries to ensure advertised range.

However, this contingency planning comes at a cost. On the day Tesla announced its shift away from permanent magnet motors, its share price dipped. While this move could be justified as a strategic adjustment to secure supply chain safety for an American company amid the US's national strategy,

the Lingang Gigafactory, which is crucial to Tesla's profitability, is still located in Shanghai, China. Moreover, both the Lingang and Berlin Gigafactories rely heavily on China's new energy vehicle supply chain.

Therefore, this so-called risk management strategy exudes a sense of inconsistency. Furthermore, it inevitably leads to performance degradation.

Nonetheless, Tesla still has an ace up its sleeve. Technically, its most advanced and high-tech offering is the Full Self-Driving (FSD) intelligent driving system, which is already being rolled out in China.

Figure| With vast amounts of data accumulated from its large user base, FSD may still be far from achieving the hyped 'full self-driving' capability, but it should have no problem meeting L2 high-level assisted driving standards and approaching conditional automation at the L3 level.

Musk has every reason to be optimistic about FSD. After all, intelligent driving relies heavily on graphic recognition and scene judgment, which necessitates massive data for machine learning. Tesla's cumulative global sales of 6 million vehicles put it in a unique position to accumulate data unparalleled in the world.

However, this advantage is not exclusive to Tesla in the Chinese market. Huawei's ADS intelligent driving system is expected to be installed in over 500,000 vehicles by the end of this year. While this is an order of magnitude lower than Tesla's FSD, Huawei boasts unique multi-sensor fusion technologies.

Speaking of data accumulation, it's worth mentioning another domestic competitor to Tesla – Li Auto, which was once criticized for its seemingly unimpressive intelligent driving system. But this year, Li Auto's intelligent driving capabilities have suddenly improved, thanks in part to its sales figures approaching one million units.

Nonetheless, one crucial factor that initially gave Tesla its edge remains – price.

Figure| However, domestic competitors have been hot on Tesla's heels, especially when it comes to vehicle sales and data accumulation. Moreover, they enjoy a pricing advantage.

Opting for the FSD system on a new Tesla vehicle in the domestic market costs an additional 64,000 yuan. In comparison, adding an intelligent driving package to a domestic brand vehicle is almost negligible.

'Enchantment' and 'Disenchantment'

'If Tesla hadn't opened its patents, China wouldn't have so many electric vehicles today!'

In mid-April this year, a prominent automotive expert from a top Chinese university, holding a doctoral supervisor position, made this controversial statement during a lecture on China's official guidance for the new energy vehicle industry.

This is a classic rumor that has circulated on simplified Chinese internet communities for years. Its origins can be traced back to Elon Musk's marketing stunt on June 12, 2014.

According to Tesla's subsequent blog post, 'All Our Patent Are Belong To You,' the company opened up a total of 271 patents, including 8 design patents and 263 invention patents, with the aim of promoting environmental protection and sustainable development.

Figure| Don't laugh, many people still believe this myth today, even professionals who get misled by false information when researching online for speeches and presentations.

This brilliant marketing move was further leveraged by Tesla after it became the first foreign automaker to secure wholly-owned manufacturing facilities in China, fueling viral marketing narratives for the domestic pure electric vehicle industry.

It doesn't take much expertise to realize how absurd it is to think that acquiring a few hundred patents would enable someone to start a car manufacturing business every month or so.

After all, starting a vehicle manufacturing company requires billions in initial capital, and new vehicle development cycles can take at least three years, even by today's standards. This isn't like opening a photography studio with a DSLR and a Macbook.

In fact, of the 263 invention patents opened up in 2014, 183 were only filed in the US and 141 were approved.

Only 8 patents were filed in China, with only 3 receiving patent approval. So, why has this significant disparity developed into widespread rumors and misconceptions on Chinese internet platforms over the years?

"All Our Patent Are Belong To You" is actually just a grand and effective marketing show

Because this is actually part of Tesla's overall brand marketing strategy.

A popular myth about Tesla once circulated online claiming that the automaker never spends money on advertising. However, even if part of this claim is true, it only means that Tesla does not advertise in traditional media. Moreover, this statement itself is part of Tesla's online word-of-mouth marketing strategy.

While Tesla may rarely run print ads, it consistently engages in online marketing across various new media platforms. These efforts include establishing a persona among potential customers, shaping the brand image from all angles, and executing highly targeted promotional campaigns.

Many people have likely encountered short videos on Douyin or Kuaishou touting Tesla's Lingang Gigafactory. The content often revolves around praising the excellent employee benefits and lavish work meals. Frankly speaking, a significant portion of these videos are clearly reverse-engineered specifically for the factory's general workforce.

For example, in one video, the blogger uses footage of a small room with tables and chairs, alongside closed buffet counters. Accompanied by captions and commentary, the video mindlessly extols the dining environment and quality for Tesla employees.

However, it is evident that this is not an employee cafeteria. The visuals and voiceover are disconnected, resulting in awkward praise. Even worse, some have even borrowed promotional images from other companies, inadvertently stealing pictures of Huawei's canteen.

Image | The author forwarded this short video to a former battery workshop worker at Tesla's Lingang factory, who immediately refuted it by saying, "How come I never saw this when I was there?!"

If someone finds this type of content extremely naive or even laughable and questions its effectiveness, I would argue that it's because the target audience does not include you.

Undoubtedly, this is simply a job recruitment advertisement leveraging short video platforms, aimed at the factory workforce...

After all that has been said, there is one point that needs to be emphasized at the end – please do not misunderstand the intention of this article. The author is not accusing or exposing anyone in particular.

In today's world, the global system has become highly complex, and knowledge is organized into a comprehensive system. Even experts in a particular field cannot know everything. They are defined as experts based on their areas of expertise.

Therefore, once one steps outside their realm of understanding, as with the expert mentioned earlier, they may fall prey to misinformation. Furthermore, these experts, who are typically born in the 1960s or 1970s, may easily become disoriented in this era of information overload.

Image | "During orientation, you hear the most about 'dreams,' and you see the most firings," according to a former Lingang employee. The factory has always had high turnover, necessitating a constant influx of new workers.

From a business perspective, whether it's Tesla or any other brand, establishing a brand persona or recruiting workers is simply part of operations. As long as it does not violate laws or public order and good customs, there is nothing to criticize.

The crucial question, then, is why are "you" the one being influenced?

Objectively speaking, Tesla, as a brand and its entire lineup of vehicles, may have lost the significant technological advantage it once had, but it still offers value.

In cities like Shanghai, if you have the means to install a private charging station and don't want to spend 90,000 yuan on a license plate (dubbed the "world's most expensive piece of metal"), and you're unsure which pure electric vehicle to buy, choosing a Model 3 or Model Y can be a "not bad" option.

Today, with Tesla having obtained certification from the Ministry of Industry and Information Technology for its data upload compliance, all bans and restrictions on Tesla vehicles in China have been lifted. Meanwhile, the rollout of Tesla's Full Self-Driving (FSD) system in China, which has long been anticipated by Tesla enthusiasts, is underway.

Image | In late April of last year, despite India's unsolicited "invitation" for a visit, Elon Musk traveled to Beijing via private jet. During his stay, he not only finalized arrangements for data upload compliance certification but also outlined a preliminary plan for the FSD system's services in China.

However, time has mercilessly marched on to September 2024...

For Tesla, in addition to advancing the launch of the FSD system in China, another crucial project is the mid-cycle refresh of the Model Y. Just last month, disguised prototypes of the refreshed Model Y were spotted and photographed in various locations in the United States, suggesting that the refresh has been underway since May of this year.

However, the author is not optimistic about this refresh as, based on available indications, it will follow the styling of the Model 3's mid-cycle refresh, with adjustments to features like the headlights and minor interior elements.

Even the controversial removal of the physical gear shift lever in favor of an electronic one controlled via the center console, which has been criticized by many, will reportedly be retained in this refresh. If there is any notable change, it might be the addition of a full-width taillight, though this is still uncertain.

There are even rumors that a seven-seater version of the refreshed Model Y will be offered. However, there is ample evidence suggesting that the wheelbase and interior space will not be altered. In other words, if a seven-seater Model Y refresh does materialize, it will likely cram seven seats into the existing 2.89-meter wheelbase...

Image | A disguised prototype of the mid-cycle refreshed Model Y spotted in California, USA

For Tesla, the outlook from the end of this year to next year can be described as grim.

On the one hand, the reception to the mid-cycle refresh of the Model 3 has been poor, likely due to limited changes and excessive simplification in terms of configuration and systems. On the other hand, with the development of 200,000-yuan Chinese-made pure electric and even hybrid sedans, consumers now have viable alternatives.

Given this situation, the Model Y's ability to maintain its market share becomes crucial for Tesla to stabilize its position in the Chinese market. However, after learning about the specific details of this model, it would be difficult for anyone not to question its future prospects.

Tesla cannot afford to lose the Chinese market, but for the Chinese market, it ultimately doesn't matter who comes in.