Tesla Has a Genius Strategy in China
Jeremy Johnson's picture

Tesla's Genius Strategy for How It Delivers Cars To and From China

Tesla has a genius strategy in how it delivers cars to residents of China and how it exports cars from China. What is this strategy that Tesla employs? What makes it a genius strategy? Let's find out!
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Tesla Sales in China

Let's take a look at the numbers from Tesla China over the last few months of this year and see why they are what they are. Numbers are much more accurate over the last several months as opposed to earlier in the year where just approximations are able to be found. Exports = how many vehicles Tesla shipped out of China to deliver. Domestic = how many vehicles Tesla sold directly to customers in China.

Source: Tesla Daily

October:
Total Vehicles: ?
Exports: ?
Domestic: ~12,000

September:
Total Vehicles: 56,006
Exports: 3,853
Domestic: 52,153

August:
Total Vehicles: 44,264
Exports: 31,379
Domestic: 12,885

July:
Total Vehicles: 32,968
Exports: 24,347
Domestic: 8,621

June:
Total Vehicles: 33,155
Exports: 5,017
Domestic: 28,138

May:
Total Vehicles: 33,463
Exports: 11,527
Domestic: 21,936

April:
Total Vehicles: 40,019
Exports: 14,174
Domestic: 25,845

March:
Total Vehicles: 35,478
Exports: 0
Domestic: 35,478

February:
Total Vehicles: 21,318
Exports: 3,000
Domestic: 18,318

January:
Total Vehicles: 22,484
Exports: 7,000
Domestic: 15,484

What is the big deal with Tesla's strategy when we look at these China numbers? It is the number of cars exported for each month in a quarter. The quarters are January through March; April through June; July through September; October through December.

We should expect the export numbers to be the smallest at the end of the quarter in March, June, September, and December later this year. Why? Because Tesla exports most of its vehicles at the beginning of the quarter so that by the end of the quarter, those exports and cars on boats that take time to get to customers are actually delivered and are counted in the quarterly earnings and results.

That is the reason for Tesla doing much more exporting at the beginning of the quarter instead of the end of the quarter. When the end of the quarter comes and it is the last month, Tesla focuses on local deliveries in order to have as many vehicles delivered as possible for the quarterly earnings and results.

Will Tesla Change Its Strategy?

I believe Tesla will change its export strategy from Giga Shanghai when Giga Berlin has reached a full production ramp. When that happens, Tesla won't need to export nearly as many vehicles from Giga Shanghai that it does now.

I'm sure some exporting is still going to occur, but it won't be nearly as much and Tesla won't have to do a bunch of exporting at the beginning of the quarter in order to have the most favorable quarterly earnings report.

Giga Shanghai is going to continue to grow. Total deliveries in China for 2021 so far is 204,200 (until we get October's numbers). Giga Shanghai will have a production volume of over 1 million vehicles, so I would expect Tesla to have a much greater set of China numbers in 2022 and beyond.

What do you think of Tesla's strategy in China? Are they doing the right thing exporting at the beginning of the quarter? Will Tesla need to export when Giga Berlin reaches volume production?

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter, Facebook, LinkedIn and Instagram to stay in touch and follow his Tesla news coverage on Torque News.


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Comments

how is Tesla's China export "strategy" being "genius". It's simply PRAGMATIC. Since Tesla sells direct, and it takes longer for the product to reach an external customer, OF COURSE you'd arrange shipments early in a quarter, so the sale could be closed in the quarter. Too much hyperbole, boys. You get plenty of clicks without this kind of bait.