Model 3 plans should reduce tariffs’ impact

Company says the fees are hurting sales of its electric vehicles in China

With tariffs hurting its sales in China, Tesla said Friday that it plans to make 3,000 Model 3 cars a week in Shanghai during the initial phase of its planned factory there.

Tesla’s plans are in the early stages. It secured land for its first plant outside the United States, called the Gigafactory 3, just last month.

“In China, which is the largest market for electric vehicles in the world, our Model S and Model X sales have been, and will likely continue to be, negatively impacted by recently-increased tariffs imposed by the Chinese government on U.S.-manufactured vehicles,” Tesla said in a filing with the Securities and Exchange Commission. Its plan to make thousands of Model 3s in China a week is meant to help alleviate some of that pain.

But it’s unclear when Tesla’s Gigafactory 3 will open. It will depend on regulatory approval, supply chain and other factors, the company said in its filing.

A Tesla spokesman on Friday would only refer to the company’s previous statements about the timeline of the Gigafactory in China. In its second-quarter letter to shareholders over the summer, Tesla said construction on the China plant was expected to start within the next few quarters, “though our initial investment will not start in any significant way until 2019.”

The company has said any vehicles it makes in China — its initial plan is to make 250,000 vehicles and battery packs a year in its Gigafactory 3 — will be sold there.

As for vehicles for the U.S. market and elsewhere, Tesla also said in its Friday filing that it expects to continue to boost its production of Model 3 vehicles at its Fremont factory to 7,000 a week. In addition, the electric-car maker reiterated its target of delivering 100,000 Model S and Model X cars by the end of this year.