Tesla delivered the first batch of Model 3 vehicles built at its Shanghai factory on Monday, moving the US electric carmaker one step closer to mass production in China.
The company delivered 15 vehicles to employees at its Gigafactory 3 plant in Shanghai and plans to ramp up deliveries in January with sales expected to start early next year, according to a report in SHINE online.
Tesla broke ground on its Shanghai factory on January 7 this year, becoming the first to benefit from a new policy allowing foreign automakers to set up wholly owned subsidiaries in China.
Tesla said the second batch of locally produced Model 3 vehicles will soon be delivered to customers and probably ahead of the upcoming Spring Festival holiday.
The China-made Model 3 vehicles, with autopilot functions, cost 355,800 yuan (US$50,923) before subsidies. Imported Model 3 vehicles start at 439,000 yuan for the longer-range version.
Tesla’s factory in the Lingang New Area of the China (Shanghai) Pilot Free Trade Zone is its first superfactory outside the US.
About 11 months after construction began, the factory began trial production and the company took pre-orders for Model 3 vehicles on its official website. Twenty days later, the first batch of Model 3s were available nationwide for test drives.
Tesla previously said deliveries from the Shanghai factory would be in the first quarter of 2020.
Delivery was earlier than expected because production had been smoother than expected. Tesla said “no difficulties were encountered and the vehicles were delivered at the pace.”
Tesla also appreciated the Shanghai government for its support and assistance.
Shanghai worked closely with Tesla to speed up construction of the factory to reflect the city’s good business environment for enterprises.
Elon Musk, Tesla’s CEO, praised the work of Tesla’s China team during a visit in August when he said: “Tesla’s Shanghai factory is progressing at a great speed. Tesla’s China team has done an amazing job and I’m astounded that so much progress has been made for the Shanghai Gigafactory.”
Tesla hopes to produce 1,000 cars a week at the Shanghai plant soon, eventually ramping up to annual production of 150,000 vehicles. The company said that currently all the locally-made sedans made in Gigafactory 3 are considered sold, including those at delivery centers and waiting in the factory’s parking lot.
Tesla’s locally-produced Model 3 vehicles will compete with local electric car makers, including Chinese electric car startups NIO and Xpeng Motors, as well as global brands such as Mercedes-Benz and BMW.
“Demand for the made-in-China Tesla Model 3s has been very hot,” Wang Hao, general manager of Tesla China, told the Global Times, without disclosing the actual order numbers.
“We have a goal of selling every Model 3 that we produce in the Shanghai plant, and we are very confident of achieving that goal,” Wang told Global Times.
Song Gang, production director of the Tesla Gigafactory 3, said that the factory produces 28 or more Model 3s every hour and works about 10 hours each day, which means that it produces more than 1,000 cars each week.
He added that the factory will be able to produce 3,000 cars per week “in the near future.”
Tao Lin, vice president of Tesla, announced that the Shanghai plant’s production capacity will be further enhanced in 2020.
“Compared with traditional car manufacturers, Gigafactory 3’s production capacity will ramp up at a speed that exceeds your imagination,” she said.
Zeng Zhiling, a car expert at Shanghai-based consultancy LMC Automotive, said that Tesla has achieved good timing in China.
“It is earlier than some other car brands like Volkswagen, in terms of NEV mass production layout – but not too early when Chinese consumers didn’t have enough knowledge about electric cars,” he told the Global Times.
Zeng is also optimistic that Tesla is likely to see its Model 3 sales double in 2020 in China, thanks to the brand’s technological advantage and further room for price cuts. Tesla sold about 30,000 Model 3s this year.
According to him, the entrance of more high-end NEVs including Tesla and other traditional well-known car brands into China will “bring a completely different picture” to the country’s NEV market, which has been slowing down in 2019 due to receding government support and the dominance of cheap, technologically unqualified NEV carmakers.
Sales of NEVs in China stood at about 1.04 million in the first 11 months this year, up by 1.3% on a yearly basis, compared with 68% growth in the same period in 2018.