Tesla is expanding its global manufacturing footprint

Tesla is expanding its global manufacturing footprint

Tesla began deliveries of its locally-made Model 3 electric car in China on 30th December, in a widely-publicised media event held at its newly-built plant in Shanghai.

A batch of fifteen Model 3 sedans made at the US2bn giga-factory in Shanghai were handed over to local employees of Tesla, with deliveries to local dealers scheduled to start in the new year.

Tesla China senior executive Wang Hao told local reporters the Shanghai plant has already achieved production of 1,000 cars per week and that orders for the locally-made Model 3 have been very strong.

China is the world's largest market for electric vehicles, with new-energy vehicle sales at 1.04 million units in the first eleven months of 2019 despite a sharp decline in the second half of the year. Most of these are battery-powered vehicles.

Local production is expected to lower costs significantly for Tesla in China, by eliminating import tariffs and the sourcing key components such as batteries from local suppliers.

Competition for local makers of upmarket electric vehicles, such as Nio, Byton and Xpeng is set to rise sharply this year as a result of Tesla's local production. A local report last month suggested the US electric vehicle manufacturer is looking to cut its China-made Model 3 prices by 20% or more this year due to lower production costs.

Tesla also said it will double the number of service centers and fast-charging stations in China in 2020 and plans to increase its aftersales workforce in the country from 600 to 1,500 by the end of the year.

A separate report in late December suggested Tesla China has secured long-term loans with local banks worth up to CNY9bn yuan (US$1.29bn) as well as an unsecured revolving loan worth CNY2.25bn, to be used to finance its Shanghai plant, including repayment of existing loans. The local banks include China Construction Bank, Agricultural Bank of China, Shanghai Pudong Development Bank and Industrial and Commercial Bank of China.