Tesla plans after-sales network expansion in China as Shanghai factory spins up

Tesla plans to turn some of its showrooms in China into one-stop shops called ‘Tesla Centers’ that also serve as delivery sites and offer maintenance support. (Reuters)
Updated 06 November 2019

Tesla plans after-sales network expansion in China as Shanghai factory spins up

  • Tesla had already treated China, the world’s biggest electric vehicle market, differently than elsewhere
  • Tesla plans to turn some of its showrooms in China into one-stop shops called ‘Tesla Centers’

SHANGHAI: Tesla plans to double the number of repair and maintenance shops, add about 100 charging stations and revamp showrooms in China as the electric vehicle maker gears up to open its Shanghai plant.
The moves mark a departure from the approach chief executive Elon Musk announced in March, when he said the company would shut many of its retail stores worldwide to cut costs.
Tesla had already treated China, the world’s biggest electric vehicle market, differently than elsewhere. The company and Musk openly disdain marketing, but in China Tesla has offered racing events and showroom parties.
“Building cars from the Shanghai factory is just the first step,” Tesla vice president Tao Lin said at an industry conference last month in Beijing. “Next we must deliver cars very well to our customers and provide very good after-sales service.
Tesla plans to turn some of its showrooms in China into one-stop shops called “Tesla Centers” that also serve as delivery sites and offer maintenance support, two sources familiar with the matter said.
The sources, who spoke on condition of anonymity because they were not authorized to speak to the media, said the rollout would start in Shanghai and Guangzhou. In coming months, the company also plans to double its service centers to 63 from 29 and boost fast charging stations by 39% to 362, according to Tesla planning documents seen by Reuters.
“Expanding the service network is very important to boost customer confidence,” Tesla China general manager Wang Hao told Reuters, adding the firm would build more charging stations in China next year at a “faster pace.”
“There is growing sales potential from more inland cities, and a need to prepare for growing repair and maintenance demands to avoid complaints,” one of the sources said.
Tesla, most of whose service centers are in China’s coastal regions and big provincial capitals, will open new ones in the northwestern city of Urumqi, southwestern city of Kunming and “Ice City” Harbin in the north, the documents showed.
The sources cautioned that plans might change depending on the circumstances.
Tesla’s corporate headquarters in the United States did not respond to a Reuters request for comment.
Its efforts to boost its physical presence in China comes as the carmaker has started trial production at the $2 billion Shanghai plant, its first overseas factory, ahead of mass production by the end of December.
Tesla has said it should be able to build 3,000 Model 3 sedans a week in its initial phases. That is nearly four times the number of imported Model 3 vehicles sold in China per month this year, according to figures from research firm LMC Automotive.
The expansion plan is likely to increase financial strain on Tesla, which has been burning cash because of heavy losses and capital expenditure.
Tesla has had negative free cash flow every quarter but five over the past decade, but positive free cash flow of $371 million in the three months that ended in September, thanks to record deliveries and reduced costs.
It was not immediately clear how much Tesla would need to spend to expand its sales and after-sales network in China.
Tesla operates about 48 showrooms in mainland China. In contrast, BMW, Daimler’s Mercedes Benz, and Audi, which will have electric sport-utility vehicle models in China by the end of this year, all have more than 500 sales outlets there.

S&P 500 inches closer to record high

Updated 12 August 2020

S&P 500 inches closer to record high

  • US stock market index returns to levels last seen before the onset of coronavirus crisis

NEW YORK: The S&P 500 on Tuesday closed in on its February record high, returning to levels last seen before the onset of the coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.

The benchmark index was about half a percent below its peak hit on Feb. 19, when investors started dumping shares in anticipation of what proved to be the biggest slump in the US economy since the Great Depression.

Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second quarter earnings season have allowed all three of Wall Street’s main indexes to recover.

The tech-heavy Nasdaq has led the charge, boosted by “stay-at-home winners” Amazon.com Inc., Netflix Inc. and Apple Inc. The index was down about 0.4 percent.

The blue chip Dow surged 1.2 percent, coming within 5 percent of its February peak.

“You’ve got to admit that this is a market that wants to go up, despite tensions between US-China, despite news of the coronavirus not being particularly encouraging,” said Andrea Cicione, a strategist at TS Lombard.

“We’re facing an emergency from the health, economy and employment point of view — the outlook is a lot less rosy. There’s a disconnect between valuation and the actual outlook even though lower rates to some degree justify high valuation.”

Aiding sentiment, President Vladimir Putin claimed Russia had become the first country in the world to grant regulatory approval to a COVID-19 vaccine. But the approval’s speed has concerned some experts as the vaccine still must complete final trials.

Investors are now hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with US cases surpassing 5 million last week.

Also in focus are Sino-US tensions ahead of high-stakes trade talks in the coming weekend.

“Certainly the rhetoric from Washington has been negative with regards to China ... there’s plenty of things to worry about, but markets are really focused more on the very easy fiscal and monetary policies at this point,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Financials, energy and industrial sectors, that have lagged the benchmark index this year, provided the biggest boost to the S&P 500 on Tuesday.

The S&P 500 was set to rise for the eighth straight session, its longest streak of gains since April 2019.

The S&P 500 was up 15.39 points, or 0.46 percent, at 3,375.86, about 18 points shy of its high of 3,393.52. The Dow Jones Industrial Average was up 341.41 points, or 1.23 percent, at 28,132.85, and the Nasdaq Composite was down 48.37 points, or 0.44 percent, at 10,919.99.

Royal Caribbean Group jumped 4.6 percent after it hinted at new safety measures aimed at getting sailing going again after months of cancellations. Peers Norwegian Cruise Line Holdings Ltd. and Carnival Corp. also rose.

US mall owner Simon Property Group Inc. gained 4.1 percent despite posting a disappointing second quarter profit, as its CEO expressed some hope over a recovery in retail as lockdown measures in some regions eased.

Advancing issues outnumbered decliners 3.44-to-1 on the NYSE and 1.44-to-1 on the Nasdaq.

The S&P index recorded 35 new 52-week highs and no new low, while the Nasdaq recorded 50 new highs and four new lows.