Tesla eyes large-scale expansion in China with Shanghai factory

Tesla's Shanghai Gigafactory is expected to double its output to 300,000 units a year after the second phase factory opens as the US electric vehicle (EV) giant eyes a big expansion in the Chinese market, Chinese experts said.

The main section of the second phase of the Shanghai Gigafactory has been completed and its Model Y will be mass-produced from the first quarter of next year, according to media reports.

Interior decoration and electromechanical testing are being carried out and are expected to be completed on schedule in October and November. Construction began in February. The second phase of the Gigafactory will be mainly used to make Model Y cars.

Tesla China's official website revealed that two versions of the domestic Model Y are available for pre-sale.

The pre-sale price of the long-endurance version of the car is 488,000 yuan ($71,444) while a high-performance version is pre-priced at 535,000 yuan. Production is expected as early as 2021, according to Tesla's official website.

The second phase of the plant is expected to increase Tesla's scale in China, enrich the product line and double its output capacity, Cui Dongshu, secretary general of the China Passenger Car Association (CPCA), told the Global Times.

“The annual output of its Shanghai plant in the first phase has reached 150,000 units. After the second phase opens, it is expected to double output to 300,000 units, which will further reduce costs and enhance competitiveness in the Chinese market,” Cui said.

Tesla's Shanghai Gigafactory is its first Gigafactory outside of the US, built to mainly produce Tesla Model 3 and Tesla Model Y cars.

Data from the CPCA showed Tesla sold 14,954 made-in-China Model 3s in June, up 35 percent from May, accounting for 23 percent of China's total EV sales.

The US-based EV giant saw its revenues in the Chinese market surge 102.9 percent year-on-year in the second quarter to $1.4 billion. China generated 23.1 percent of Tesla's total revenues of $6 billion in the quarter, according to a filing by the company in July.

“It is expected that Tesla will accelerate its expansion in the Chinese market and center its manufacturing in China, following China's effective handling of the COVID-19 epidemic and market profitability,” Cui said.

Tesla established a new sales and service company in Kunming, capital of Southwest China's Yunnan Province on Thursday, with registered capital of $1 million.