Tesla has delivered the first cars produced by its Chinese Gigafactory, just under a year after the company broke ground on its first factory located outside of the US. Reuters reports that the Model 3 vehicles were delivered to 15 of Tesla’s employees as part of a ceremony. The deliveries were made well within schedule by the company, which had previously said it wanted to begin delivering its Chinese-made cars before the Lunar New Year on January 25th. The locally-produced cars already offer a large price saving over imported models, and a Bloomberg report recently said the company could lower prices further as it cuts costs and uses more locally-sourced components.
The deliveries mark an important milestone for Tesla, which hopes to use its Shanghai factory to gain a foothold in China, the world’s largest market for electric vehicles. It’s hoped that the local factory will help to speed up deliveries and insulate the company from the ongoing trade war between US and China. The Shanghai Gigafactory is the first wholly foreign-owned car plant in China.
The Standard Range Plus Model 3s produced in the factory will be sold for 355,800 yuan (around $50,000) before subsidies, while models imported into the country currently start at 439,000 yuan (around $63,000), according to Reuters. Next year could see prices drop further according to Bloomberg, as Tesla cuts costs and starts using more local components to reduce prices by as much as 20 percent.
Less than a year after construction at the factory started
Tesla signed the deal to build its third Gigafactory back in July 2018, and it follows its first two US Gigafactories in Nevada and Buffalo, New York. Tesla started construction of the Shanghai factory itself in January of this year, and by October it said it was already producing vehicles on a trial basis. Reuters notes that the factory is up and running just 357 days after construction started.
Now, the challenge for Tesla will be ramping up production. The company has said that it hopes to produce 3,000 Model 3 cars per week by early next year, according to Electrek, increasing to as much as 500,000 vehicles a year within two to three years — an average of just under 10,000 a week — according to the agreement it originally signed with the Chinese government back in 2018.
Tesla’s speed in setting up Gigafactory 3 bodes well for Gigafactory 4, which the company’s CEO Elon Musk announced in November will be located in Berlin. The company says that it wants its European Gigafactory to be operational by 2021. Musk says his eventual plan is to build as many as 10 or 12 Gigafactories around the world.