Hey, I’m Steven and this is Solving The
Money Problem.
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to say a huge thanks to the first 50 members
of this channel.
You guys are awesome.
Thanks for your support.
So, considering that the United States is
the center of the universe, it’s easy to
overlook what’s happening elsewhere.
Like, use of the metric system, the existence
of effective healthcare and the resumption
of “business as usual”.
China is key to the future of Tesla and in
this video I’ll explain why Tesla Will ABSOLUTELY
Dominate China and make billions.
Let’s dive in.
Hey guys, before I forget.
Webull have extended their offer for US residents
until the 16th of April.
If you'd like to help out the channel and
get up to two free stocks, use the link in
the description.
Alright, let’s get back to it.
Brand Matters
I’m going to be generalizing a lot in this
video.
If this gets your panties in a twist, tell
me all about it in the comments.
But I’m still going to do it.
Repeatedly.
Brand matters a LOT to the average Chinese
consumer.
The prestige and status of luxury products,
especially vehicles, can’t be overstated.
You could say the Chinese are DRIVEN by prestige.
Haha.
Get it?
Haha...
Oh…
..that wasn't funny, was it?
Let’s not beat around the bush.
The only thing more important than your children
becoming doctors and lawyers is for you to
ALSO own a luxury vehicle or two.
And the Tesla brand has hit it out of the
park.
Chinese consumers LOVE Tesla.
I mean, LOVE.
This alone is a huge tailwind for Tesla and
it’s one of many.
The World’s Biggest EV Market Is Getting
Bigger
China is far and away the world’s largest
and most mature electric vehicle market.
And it's GROWING.
I mean, China is the largest vehicle market,
PERIOD.
And electric vehicles already make up almost
5% of new vehicle sales while in most other
countries, electric vehicles are lucky to
hit 2%.
Not only is the world transitioning to electric
vehicles, meaning this 5% will, in time, become
about 100% thus the market potential for Tesla
is GARGANTUAN, but China’s new vehicle market
itself is experiencing a huge BOON.
As the country continues developing rapidly,
people by the millions enter the middle class
and beyond and become able to afford new vehicles.
These two forces combined ensure China will
remain the world’s largest vehicle market
for some time.
Any automaker with ANY sense should be all
in on China.
Tesla Has The Best Value Product
And Chinese Consumers Are Smart
This is a point you can’t deny.
If you take an objective look at say a Model
3 or Model Y, dollar-for-dollar there is NOTHING
even CLOSE to offering the same value.
YES there may be CHEAPER vehicles.
COST does not equal VALUE.
Cost is what you PAY.
Value is what you GET.
Safest car ever?
Check.
Gets new features with over-the-air updates?
Check.
Performance improves over-the-air?
Check.
Best infotainment?
Check.
Most efficient battery therefore best running
costs?
Check.
Best driver-assistance features?
Check.
Makes fart sounds?
Check.
You get the point.
In terms of VALUE, nothing else compares to
a Tesla.
This COULD change but today, it is a fact.
That’s not to say every consumer can afford
a Tesla OR that every consumer buys based
on value rather than emotion.
BUT, many do.
And that’s the point.
The Chinese market is ****ing enormous and
Tesla has far-and-away the best value product
AND a strong brand.
Sure, a Tesla may not add as many inches as
a Lambo or Ferrari, and some consumers will
prefer the aesthetic of other brands, but
there’s room in the market for ALL consumers,
Including those who take a more rational approach.
Once again, I’m going to generalise and
potentially cause some butthurt.
Ready?
Chinese consumers are WAY smarter than US
consumers on average.
They make smarter financial decisions, smarter
purchasing decisions, manage their money better
and--you know what.
Let’s pull up the average savings rate in
the US vs China.
This will make my point for me.
Average savings rate in the United States:
7.7%
Average savings rate in China:
25%
Enough said.
On average, the Chinese are smarter with their
money and that includes purchasing decisions.
If you’re in China, in the market for a
new vehicle AND your budget allows, a Tesla
is about the smartest choice you can make.
And if you care about the environment, even
better.
China Loves Elon (and Tesla)
They say a picture is worth a thousand words.
And I say great, that’ll save me some talking.
[music]
With moves like that, is it any wonder China
loves Tesla’s eccentric CEO?
Elon Musk is a walking meme with an ACTUAL
personality and that’s something I’m afraid
I can’t say about most other CEOs.
While many outside China view Elon with envy,
resentment, projections of their own insecurities
and have a general aversion to his weirdness,
the Chinese love Elon.
I suspect part of this has to do with their
common appreciation of science, technology,
engineering and mathematics.
For a clue as to how much weight the cult
of Elon carries in China, we need only look
back to 2019 when Elon was invited to “debate”
artificial intelligence with Alibaba co-founder
Jack Ma.
Two titans of industry, both co-founders of
multi-billion dollar companies.
What a moment.
The fact that this event took place speaks
volumes of how highly China thinks of Elon
Musk.
Unfortunately, Mr Ma was clearly unqualified
to talk about AI.
But that didn’t stop him.
In fact, let’s watch Ma self-immolate for
a moment.
It’s just too funny not to.
People worry a lot about this today--are those
people--I called them, called..called.
College smartness.
People like us street smart.
We never scared of that.
We think it's a great fun and we want to change
our self to embrace it.
[I don't know man.
That's like famous last words.]
Still one step you go to Mars, but you will
never be able to come back.
[Yeah, that’s not how it works though]
That's my view.
And that's my view about jobs.
Don't worry about it.
Well will have jobs.
[Yeah]
[I...]
Human being will be controlled by machines?
I never think about it.
I think it's it's it's it's impossible.
Oh, right.
It's impossible machines are invented by human
beings and according to the science, right?
Humans can never create another animal that
is smart as humans, especially where you have
so many smart people.
It's impossible to make another smart people.
[I very much disagree with that.]
Okay?
Yeah, that's good.
[Yeah]
Computer may be clever but human being a much
smarter
[Yeah, definitely not.]
Computers are clever.
But there will be more tools that human beings
will created much cleverer than computers.
That's my view.
No wonder KFC wouldn’t hire him.
Anyway, China’s love of Elon and Tesla permeates
the government who have extended countless
favours and worked closely with Tesla to help
them at every stage including a special import
tax exemption and most important of all, allowing
Tesla to become the first foreign automaker
to wholly own and operate a factory in China.
Prior to this first, the Chinese government
required foreign automakers to partner with
a local company.
This one fact is SO important it bears repeating.
The Chinese government has BENT ITS OWN RULES
to help Tesla.
Get it?
The Chinese government wants Tesla to succeed.
This matters.
Gigafactory Shanghai
Let’s watch this clip from March 2019:
Tesla has planned on making a huge entrance
into the Chinese market by building a factory
there that makes Model 3s the standard version
which is to say the least complex version
of the model.
While Tesla is known for setting goals that
are completely beyond anything that the auto
industry would possibly ever do.
Unfortunately, Tesla is also known for not
meeting those goals.
Elon Musk said that there is going to be model
3s manufactured from the China plant by the
end of 2019.
So far the China plant is basically an open
field with some digging going on.
It's harder and harder to believe that there
will be Model 3s coming out of the Tesla china
gigafactory by the end of the year.
According to my sources if Tesla wants to
win at China they need to get cars out fast.
But what Tesla doesn't have right now is a
factory.
So that's a problem.
Well... that’s awkward.
We now know Tesla constructed its Shanghai
Gigafactory in record time.
When I say record, I mean, record.
It appears to be the fastest EVER construction
of a factory of its size ANYWHERE ON EARTH,
by a huge margin.
And it was done for 65% less cost per unit
of capacity than Tesla’s US production facilities.
Tesla learns fast.
They’re doing everything in China faster,
smarter and cheaper.
But Tesla isn’t done.
Stage 2 of the factory is now well underway
and looks to be completed by Q4 2020.
What’s stage 2?
Glad you asked.
Model Y production.
Tesla is moving ahead so fast that it’s
hard to keep up so let’s get to the crux
of this video.
The Numbers
Tesla sold over 10,000 vehicles in China in
March.
This is an annualized rate of over 120,000
and marked a whopping 25% share of China's
new electric vehicle sales for the month.
I will stake anything on the fact that Tesla's
margins in China are better than the US and
will only improve further over time as more
of the supply chain is localized and production
volumes grow.
Stage 1 of Gigafactory Shanghai has production
capacity of over 150,000 Model 3s per year
and it’s almost fully ramped.
But wait, there’s more.
Stage 2 of Gigafactory Shanghai, which will
produce equal amounts of Model Y, is under
construction and moving at a pace akin to
Stage 1.
By Q4 2020, it should be operational.
It’s obvious that, short of an extinction-level
event, Tesla will produce on the order of
200,000 vehicles in China in 2020 and probably
closer to double that in 2021.
Let’s say that in 2021, Tesla China delivers
370,00 vehicles.
“So what?”, you say.
That’s more than the entire ****ing business
did in 2019.
One more time.
Next year, Tesla China is likely to sell more
vehicles than the entire business did in 2019.
It took Tesla 16 YEARS to reach the same scale
that Tesla China will reach in 3.
Let that sink in.
Tesla has a VERY clear path to WAY MORE THAN
DOUBLING its revenue in just two years.
China is a blip on Tesla’s radar today.
Soon it will be the cornerstone of their business.
China is the world’s most mature electric
vehicle market.
Tesla is the world’s most mature manufacturer
of electric vehicles.
It’s a match made in heaven.
I’m sure some of you are flipping out ready
to tell me no one will buy cars in 2020 and
2021 and the world is ending and I should
be panicking more, stocking up on toilet paper
and selling my stocks because nothing will
ever be the same again.
That’s fine.
Leave your comments below so I can save them
for a future video.
I see enough evidence that despite the fact
that YES, global automotive sales WILL be
soft for some time, Tesla has room to breath.
Their products **** all over the so-called
competition, are unmatched for value, are
technologically superior, bear a strong and
prestigious brand and most important of all:
Tesla is currently production constrained.
We don’t know how much underlying demand
there truly is so the only way we’ll know
is waiting 2 years and watching things play
out.
Even if I’m wrong and the entire global
economy is on pause for a few years, it changes
nothing fundamental.
Tesla is in a strong position in China, with
help form the government, love from consumers,
an incredible product, the world’s largest
and most mature EV market, a rising middle
class, a prestigious brand, a wholly owned
production facility which is about to DOUBLE
its capacity and countless other tailwinds,
Tesla Will Dominate China And Make Billions.
And I didn’t have time to talk about robotaxis
or compact cars.
I guess they’ll have to wait for another
video.
I’m Steven Mark Ryan, this is Solving The
Money Problem and I love you all.
Thanks so much for watching.
Let me know your thoughts in the comments
below.
Do you agree or disagree with anything I said?
How do you see Tesla doing in China?
Will it become their biggest market?
And of course, if you have any ideas for future
videos, let me know.
I read ALL your comments.
p.s.
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