By on December 27, 2019

Tesla’s first foreign assembly plant will make its first deliveries — to a handful of employees — on December 30th, just shy of a goal marker it set for itself at the beginning of the year.

Construction of the automaker’s $2 billion Shanghai facility kicked off back in January with a promise to reach a production rate of 1,000-plus vehicles per week by the end of the year. While the plant’s production rate is not known, it received the necessary regulatory approvals for production in September, with the first Model 3s assembled in October.

According to Reuters, the first individuals to receive Chinese-built Teslas on Monday will be 15 Tesla employees, which raises the question of just how many Model 3s the company built over the past two months and change.

Deliveries to non-employees should begin before the Chinese New Year (January 25th), the company claimed.

In the past, Tesla had a habit of setting weekly production goals months in advance, then moving the goalposts back as the production ramp-up fell short of expectations. Given the startling speed at which Tesla got its Shanghai facility up and running, it’s possible this plant achieved the near-impossible. The first week of January will tell the tale, as CEO Elon Musk would surely boast about reaching a 1,000-per-week rate in the final days of December.

Once the Model Y joins the Model 3 in Shanghai, vehicles could leave the plant to the tune of a quarter-million units per year. That’s the automaker’s ultimate goal, anyway.

Tesla’s lowest-rung model starts around $50,000 in China, but its appeal could get a shot in the arm in 2020 thanks to a scrapped purchase tax. A recent report claims the Model 3 could see a price reduction of up to 20 percent. While “new energy” vehicle sales have taken a hit in China following the removal of state subsidies, a price chop, coupled with reduced competition from artificially propped up Chinese startups, works in Tesla’s favor. The Model 3’s significant base range doesn’t hurt it, either.

[Image: Aleksei Potov/Shutterstock]

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26 Comments on “Chinese Tesla Plant to Make First Deliveries Before Year’s End...”


  • avatar
    Superdessucke

    Too bad Chinese tariffs prevent them from building the cars here.

    • 0 avatar
      thx_zetec

      Yes. China had large tariffs long before Trump they had unilateral trade war. We were told China would sell products they were good at and we would sell innovative products. Tesla could have built cars in CA and sold em in China even with overvalued dollar, high labor costs and CA regulation. Now watch Tesla fails in China see Uber, Google,Amazon etc

      • 0 avatar
        probert

        They have been building cars in the US and selling in China. But China is a huge market and has invested billions in EV infrastructure – makes sense to have a factory there.

        They will continue building them in the US for the US, and will be building a new factory in Germany which has high labor costs and regulations. I think they’ll do well there too.

        As far as I know, they’re not in competition with uber and google LOL, but of they do as well as Buick all is good.

      • 0 avatar
        Superdessucke

        Oh I know that. I was being a little tongue-in-cheek there. It’s funny how Democrats self-righteously point a finger at the Trump Administration for evil tariffs when the Chinese and most other countries have been implemeting tariffs forever. China’s auto tariffs have been, in particular, unfair over the years.

    • 0 avatar
      Robbie

      Given the current trade climate and the new precedents that have been set, producing cars domestically for export will be risky for the next decade.

      • 0 avatar
        Superdessucke

        So practically no change then, to the average American worker anyway. I actually did cry a very small, very minor tear for auto industry types who were benefiting from our unfair trade practices. Then I looked at my 25% rate of return I got in 2019 on my 401k and got over it, LOL!

        • 0 avatar
          Robbie

          Given that we have made our import-export situation insecure for at least a decade, US imports and exports of cars and car parts will be lower than in the situation where no upheaval had taken place. As such, we effectively have a car tax in place now.

          • 0 avatar
            Art Vandelay

            wrong

          • 0 avatar
            Luke42

            @Art Vandelay:

            We all wish economics we’re as simple as Trump says it is. Alas, there’s 800+ years of well-recorded economic history showing otherwise.

            Everything would be easier if this weren’t the case and international trade negotiations were as simple as an episode of the apprentice.

          • 0 avatar
            Art Vandelay

            Not a huge Trump fan @Luke, but do go on and analyze me based on one word and then demonize those who don’t share your worthless opinions just like the rest of the little self assured pricks on the internet

          • 0 avatar
            Robbie

            Art: the anti-trade fallacy is pretty bipartisan. Both Democrats and Republicans did not want TPP.
            It should also be clear to all that Trump is providing a counterproductive and very bad answer to a problem that the previous administrations did not address properly.

  • avatar
    mcs

    “which raises the question of just how many Model 3s the company built over the past two months and change.

    Deliveries to non-employees should begin before the Chinese New Year (January 25th), the company claimed.”

    Recent drone footage answers that question. Production is definitely ramping up:

    youtu.be/ygb4N6fV3oo?t=131

  • avatar
    conundrum

    Be interesting to eventually discover whether the subsitute lithium cells from LG Chem and other suppliers are anywhere near as good as Panasonic’s 2170 used in the US-made Tesla Model 3 batteries.

    Panasonic declined losing more money by supplying cells for Tesla in China. Been following their travails on the Nikkei business web site. They barely squeak out a profit overall and supplying Tesla has not been a lucrative business for them. So Panasonic has recently decided to turn itself into a general automotive parts supplier in order to raise margins. They’ll still supply Tesla in the USA, but that’s it, no doubt unless they can command higher prices to other companies and actually make a profit. It’s highly unlikely that other companies make such good cells at the moment, but to purchasing accountants, price comes before performance. Hey, to them a loaf of elastic Wonderbread is the same as real bread that costs three times as much. Then you end up with an Audi E-Trons or Porsche Taycans with lousy range and embarrassed execs.

    Still, whenever China gets in a snit about either Japan or South Korea, tariffs usually go wild along with official dunning of cars and makers from those two countries. Hyundai, Honda and Toyota have all felt official wrath twice this past decade. So if this tariff-free zone where Teslas are made outside Shanghai actually remains tariff-free in times of trade uproar, there’ll be no problem. One hopes, but not necessarily expects, the rules will be followed in times of, uh, stress.

    Every man and his donkey tried to get in on the EV “boom” in China, to the point where over 300 no-hope companies were working away at them three or four years ago. The small ones were actively discouraged by the national government as a waste of space and effort. But local governments and the wealthy bet the farm on local startups, stars in their eyes all the way. The official “advice” to stop was ignored. This fracturing of effort is what’s behind the ending of national rebates on EVs there. The dross will go bankrupt, and the biggies will be left, perhaps only three or four outfits of decent size to compete internationally as well as at home. Well, that’s the Plan.

    If all goes well, Tesla should flourish there providing those substitute lithium cells are any good — if they aren’t the word will get around very rapidly, like a year ago when JLR dealerships and their factory were picketed for bad quality goods, leading to that $4 billion loss in the first quarter this year and their current perilous existence globally.

    • 0 avatar
      mcs

      Panasonic is being dumped by Tesla because Tesla is going to start manufacturing their own batteries. Currently, the reason the Panasonics they are using are so good is because it’s Tesla’s technology from their battery research lab inside of them. Now they’ve bought a battery manufacturing technology company and will be cutting the other companies out of the loop.

      https://directory.packagingdigest.com/hibar-systems-ltd-comp275993.html

      https://electricautonomy.ca/2019/10/04/tesla-acquires-canadian-battery-specialist-hibar-systems/

      The outside battery suppliers for the Shanghai factory are probably only temporary. As soon as Tesla gets its own facilities built, they’ll be out. The other supplier’s cells are probably as good as Tesla’s current product in terms of durability and energy density. CATLs density is even better.

      The next generation of battery tech the leaders will be Tesla and Toyota. Tesla with the Maxwell technology and Toyota with its solid-state battery. Tesla will probably have its technology rolling off the lines next year. Toyota will show its battery this summer, but it might not be in mass production until 2025.

      • 0 avatar
        TimK

        I wouldn’t be so dismissive of Panasonic. They have been making high-discharge batteries since the late ‘70s and their culture of quality and “know how” cannot be duplicated in a start-up. Do you think they will cede a multi-$T business opportunity to the likes of Tesla and some barefoot Chinese?

        • 0 avatar
          mcs

          The only reason I didn’t include Panasonic is that I don’t know where they are with their technology. They do have a joint-venture with Toyota and they may be helping them with the manufacturing technology for their solid-state battery.

          Don’t discount startups. A materials science Ph.D., some luck, and a good patent attorney can get the jump on a slow plodding legacy company.

    • 0 avatar
      Master Baiter

      “Then you end up with an Audi E-Trons or Porsche Taycans with lousy range and embarrassed execs.”

      I wouldn’t worry so much about range with alternate battery suppliers, as even cheap Chinese cell suppliers can make cells with the same capacity as Panasonic. It’s quality and reliability that will suffer, and you won’t know your cells are crap until years down the road after you’ve purchased the car.

      Other manufacturers have not been able to match Tesla’s range because of the efficiency of their pack design and motor/controller system.

    • 0 avatar
      Lokki

      Conundrum – I think you’ve written the best assessment of the situation I’ve seen. Panasonic is not happy with Tesla. MCS is correct that Tesla is preparing a substitute source but I would wonder if it is more from necessity than desire.

      I understand Tesla opening a plant in China; they have little choice. They must become established as the EV of choice in China, as they have in the U.S. and Europe, and that means grabbing big market share before any viable competitor becomes established.

      As to how things will go with their Chinese venture, I have no prediction. I have a couple of Japanese friends who manage factories in China, and both tell me that the Chinese do excellent quality work as long as you have constant -outside- QC and that you must be resigned to the fact that your technology will be stolen.

      I am cynical and typically pessimistic especially about China, but I have to say that Tesla has continually managed to stay one step ahead of the Devil for quite a few years now, and so that seems to be the way to bet.

  • avatar
    TimK

    Drone video shows a lot of construction still underway, and that one paved area can only hold a few hundred cars. We’ll know the real push is on when the tent goes up. ;-)

    • 0 avatar
      ToolGuy

      My limited understanding is that the pad (with no building) represents the next ‘phase’ of construction – the buildings for the current phase are essentially done. (A lot of the ‘drone’ footage can be confusing in this regard, since they are just catching you up on the latest developments.)

  • avatar
    thejohnnycanuck

    It’s about time they started making deliveries.

    Seems like I’ve been waiting forever for my Kung Pao chicken.

  • avatar
    ToolGuy

    – It is a challenging task for an established automaker to introduce a new product in an existing plant (ask Ford in 2019).

    – It is a larger challenge for an established automaker to build a new plant (ask Nissan in 2003).

    – It is a further challenge to start a new brand (ask GM in 1990 or Toyota in 2003).

    – It is even more challenging to start a completely new car company.

    Hulu has a fascinating documentary available: “Framing John DeLorean” (double meaning of framing, don’t jump to conclusions)

    https://www.hulu.com/movie/framing-john-delorean-8eacd109-e343-47a4-b617-5dec256ace61

    Includes DeLorean at GM, the Pontiac GTO (“option package”), the Greenbrier “quality speech,” Colin Chapman/Lotus involvement, the 8-count acquittal and much more.

    Required viewing if you are an engineer considering starting your own automotive company.

    • 0 avatar
      TimK

      Here is a recent VOA article that talks about their $1.3B loan package to get the ball rolling:
      https://www.voanews.com/economy-business/tesla-secures-129-billion-loan-chinese-banks-shanghai-factory
      Looks like about 1/3 of that money is earmarked to pay off prior (construction?) loans that come due in March 2020.

  • avatar
    Art Vandelay

    meh, they can SHOVE IT!

  • avatar
    indi500fan

    What’s the deal with the Tesla fatal attraction to fire trucks? There was another tragic crash yesterday on I-70 where one blasted into the back of a fire truck stopped to attend to a previous wreck.

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