Tesla CEO Elon Musk is pushing ahead with global expansion plans to start making cars in China. On Wednesday, October 23, the company informed investors that the new Tesla's Gigafactory in Shanghai began trial production “ahead of schedule” this month and is building “full vehicles, from bodywork to painting to general assembly.” And the company plans to announce the whereabouts of its next Gigafactory in Europe by the end of the year.
Location of Gigafactory in China an easier access to major global car markets — China is the world's largest — could give the company tens of millions of potential new customers. And success for Tesla in China and elsewhere could boost confidence that the company has the ability to hit delivery targets as it grows.
The Shanghai factory is also known for how quickly it built. Only 10 months ago Tesla began work at the factory. And in a letter to the shareholders, the company said that the construction of the facility was approximately 65% cheaper than its manufacturing plant in the United States.
Tesla received significant support from the Chinese government last year. It was the first foreign car manufacturer to be allowed to open a factory in the country without a Chinese partner, and recently he won tax breaks for some of his cars.
According Tesla the initial goal for the Shanghai factory is to make 250,000 cars a year before ramping up to 500,000 units.
“This month we started started pre-production at Giga Shanghai … from full bodies to paint to general assembly, this is a real factory with a tremendous amount of equipment in it,” said Musk.
“A lot of people see the outside shell which is enormous … [but] it was essentially below the water table in January.”
“More significant is that we were able to install massive stamping machines, a fully operational paint shop and a sophisticated general assembly line in parallel,” he said.
“I’m not aware of any factory of this magnitude in history being constructed in such a short time period of time.”
Once it is up and running, Tesla will work towards achieving a target of 3,000 units a week from Gigafactory 3. Given the lessons learned from the 2018 Model 3 production ramp at Fremont Musk expects this will be a steady ramp that will soon exceed that 3,000 unit target.
“We are already producing full vehicles on a trial basis, from body, to paint and to general assembly, at Gigafactory Shanghai,” the company said in its official Q3 update letter.
“We have cleared initial milestones toward our manufacturing license and are working towards finalizing the license and meeting other governmental requirements before we begin ramping production and delivery of vehicles from Shanghai.”
“China is by far the largest market for mid-sized premium sedans,” Tesla wrote.