— This is the script of CNBC's news report for China's CCTV on July 31, Monday.
Tesla's Model 3 was widely compared to the Apple's iPhone. Model 3 is to automobile makers what Apple's iPhone was to the phone industry. Just like how Apple was the trend-setter of the smartphone, with its wallet-friendly price tag, Tesla is believed to be the kick-starter of the electric car trend, and make it mainstream.
The main product of the launch party was the $44, 000 Model 3 that was ordered last year by mainly Tesla's employees. The cheaper version, going at $35,000, will only be released this fall. As its price is less than half of the Tesla car models, Model S and Model X, Model 3 would have a very high demand in the U.S markets.
More than 500,000 units of Model 3 were ordered. The main roadblock that Tesla would face in trying to make electronic cars mainstream is their ability to guarantee the production of these units and to deliver them to their customers on time. How would they do so? Tesla's founder and CEO, Elon Musk, hoped that, by December this year, the production of Model 3 can reach 20,000 per month, and another 40,000 next year. He hopes that by 2018, the company's total vehicle production target would be half a million therefore being able to fulfill all Model 3's orders. In other words, this plan is a tall order and it remains questionable whether Tesla can deliver all these cars on time. Morevoer, Tesla is well-known for its dark history of delayed delivery.
Therefore, at beginning of this month, many analysts have suspected that the sales of two luxury models, Model S and Model X, would be lower than expected. Furthermore, the production goals of Model 3 are also uncertain, resulting in a dim outlook of Tesla's stocks. As a result, Tesla's share price in July showed a substantial callback, falling to the bearish zone.
Besides, Tesla is not only pitting against itself. Earlier this month, Volvo announced that from 2019 onwards, Volvo's cars will not be equipped with internal combustion engine and shortly afterwards, Tesla's stocks fell drastically.
Furthermore, Toyota, Volkswagen and Daimler have plans to release electric cars by 2025. Soon, gasoline cars will be obsolete.
[David Seaburg David Seaburg, Managing Director Head of Equity Sales Trading, Cowen and Company] "It's expectations vs reality. If you are of the opinion that Tesla is going to own the electronic car market, you buy the stocks today. I am not of the opinion. I think there's a lot of competition which ... coming in. You heard Volvo today talk about, getting out of the gasoline car market, starting in 2019. It's going to take time. I dont believe Tesla is gonna own the market."
Analysts are also expecting car battery costs to be lowered and emission rules to be more stringent. At the same time, government subsidies for electric cars will also motivate world's leading automakers to step up on their electric car manufacturing plans. As more intense competition is being introduced into the market, the faster it becomes for electric vehicles to become mainstream.
CNBC's Qian Chen, reporting from Singapore.