Tesla To Double Manufacturing With New Shanghai Factory – Report

Tesla's Model Y. Image credit: Tesla

World’s most valuable car maker Tesla is to construct new factory in Shanghai, to more than double China production capacity

Electric vehicle (EV) giant Tesla is reportedly going to double its production capacity in China, amid growing demand.

Reuters, citing two people familiar with the matter, reported that Tesla plans to start work on a new factory in Shanghai as soon as next month. This will more than double its production capacity in China, in order to meet growing demand for its cars in the country and export markets.

The new plant will be located in the vicinity of its existing production base in Lingang, Pudong New Area.

Tesla's Model Y. Image credit: Tesla
Tesla’s Model Y. Image credit: Tesla

China expansion

Tesla it should be remembered had become the first foreign carmaker to operate a wholly owned factory in China with its Shanghai plant, which opened in 2019.

Tesla actually started production at its Shanghai plant, also known as the Gigafactory 3, less than a year after breaking ground.

The plant makes the Tesla Model 3 sedan and the Model Y, and was used to build 500,000 cars per year, but expansion plans for Gigafactory 3 could see production this year at that factory ramp up to 1 million EVs a year.

But once the new factory in Shanghai is constructed and fully operational, Tesla will have the capacity to produce up to 2 million cars per year Reuters reported, citing people who asked not to be identified in discussing still-private plans.

Tesla meanwhile declined to comment on the report.

The expansion, if it goes ahead, would give Tesla a dedicated production capacity in the world’s largest car market on a par with more established brands in China, Reuters reported.

This is not Tesla’s only expansion in China.

In January 2020 it was reported that Tesla would open a design and research facility in China, in an effort to make “Chinese-style” vehicles for the local market.

Growing demand

According to Reuters, Tesla sales have surged in China and its Shanghai factory has become a crucial export hub to markets such as Germany and Japan.

Last year, Tesla’s China-made cars accounted for around half of the 936,000 vehicles it delivered globally, based on Reuters calculations using China Passenger Car Association data.

Earlier this month, Tesla revealed its China revenue more than doubled in 2021 to $13.8 billion from the previous year.

Elon Musk said in October that the Shanghai plant had surpassed its Fremont, California factory – the company’s first plant – in output.

And it should be remembered that Tesla has faced delays in opening its gigafactory in Germany.

Musk had originally aimed to open a Berlin plant in July 2021. Approval for the plant has been complicated by a court case challenging a licence granted to its water supplier.

China problems

And Tesla’s China foray has not been without some problems.

Last year it was reported that China’s military had banned Tesla cars from its facilities, including housing complexes, over national security concerns.

Tesla cars feature a number of internal and external cameras that are used for navigation and safety purposes. Authorities were worried these cameras could be compromised when the EV was within a sensitive location.

Such was the furore that Elon Musk was forced to deny the company’s electric cars could be used to leak information from China.

“There’s a very strong incentive for us to be very confidential with any information,” Musk said at the time. “If Tesla used cars to spy in China or anywhere, we will get shut down.”

Then last month Tesla was heavily criticised when it revealed it had opened a dealership showroom in the Xinjiang region of China.

This is the area at centre of Western claims about human right abuses and forced labour camps.

Xinjiang is home to the country’s predominantly Muslim Uyghurs and other Muslim groups such as the Kazakh and Kyrgyz ethnic minorities.