Tesla has now confirmed plans for a second manufacturing plant in Shanghai. According to reports, the second plant will have annual vehicle production capacity in the region of 450,000 units and will start by making the Model 3 and Model Y.

The second plant will double Tesla’s China capacity to approaching one million units a year.

Tesla is looking to make more cars in the world’s biggest electric car market. It is aiming to make a million cars a year in China by the end of the decade and cement its presence in China as a premium brand and leader in the high-growth EV segment. This second plant was therefore a racing certainty.

Mike Vousden, Automotive Analyst at GlobalData, comments: “Tesla will be prioritizing China because the country is both the largest new vehicle market and the largest market for battery electric vehicles, so offers more growth potential than traditional markets.

“By 2029, Tesla’s total production is forecast to reach 2.56 million units – 900,000 from the US, 700,000 from Germany and 950,000 from China. That figure would again put it, in volume terms, in a similar position to BMW and Mercedes, which both produce around 2.5 million units per year, and can be considered direct competitors to Tesla.

“The expansion strategy for China is clearly central to Tesla’s growth plan and to it continuing to be considered – especially by investors – as a sector leader.”