Tesla’s Shanghai Factory To Make Model 3 EVs For China Only: Elon Musk

The first overseas factory of US electric car maker Tesla in Shanghai in China would be focused on manufacturing of Model 3 vehicles exclusively for the Chinese consumers, said the CEO of the company Elon Musk.

Musk said this while on a trip to Shanghai to initiate construction of the factory which is being constructed in partnership with the Shanghai government. Analysts believe that this association would prove very beneficial for Tesla. The deal for the Chinese gigafactory was made by Tesla in June this last year which was soon followed by the announcement in November of pre-order opening for its Model 3 for customers based in China.

According to Musk, the construction of the initial phase of the factory would get completed by the summer. He added that before the end of this year, the gigafactory would start production. After reaching full production capacity, the new production plant is expected to roll out 500,000 EVs a year. It is expected that the entire production facility would get completed by next year and full scale production to begin.

Vehicles for the U.S. and other markets would be manufactured at the US factories of Tesla, Musk clarified on Twitter.

There are also other companies that are planting manufacturing roots in China.  According to a statement this week by Byton, which is a U.S-China joint venture rival of Tesla and founded by former BMW and Infiniti executives, that by May this year, the company is set to complete construction of a factory in Nanjing. The company said that 300,000 vehicles per year would be the production capacity of the factory.

FAW Group, Tus-Holdings and CATL invested in the company in a $500 million Series B funding round in June. In addition to loans and subsidies from China, the company has raised $850 million from investors.]

“Shanghai Giga will produce affordable versions of 3/Y for greater China. All Model S/X & higher cost versions of Model 3/Y will still be built in US for WW market, incl China,” tweeted Musk with respect to the new factory. .

In recent times, China has been a cause of concern for Tesla despite the positivism surrounding the Shanghai project.

The customer subsidies for green vehicles has been reduced in China even as the uncertainty over its ongoing trade spat with the U.S. looms over the attempts to American companies attempting to reach out to the consumers of the country. After the announcement of Tesla of the reduction of the price of the Model 3 by seven percent in China, there was a fall in the share prices of the company by almost eight per cent ahead of the New Year. Earlier in November last year, Tesla had also announced the reduction for ices for its Model X and Model S cars. The price reduction announcement for Model 3 was also accompanied by Musk’s pledge of reimbursing those Tesla consumers of tax credits in the U.S. who would stand to miss the government incentive because of the company not being able to deliver the pre-December orders placed by customers by the end of 2018.

The Chinese market is by far the largest market for electric vehicles in the world and hence very significant for future growth of EV makers.

(Adapted from TechCrunch.com)

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