The Wall Street Journal reports Elon Musk’s China Factory—Now a Field, Soon a Plant—Aims to Pump Out Its First Tesla This Year.
With the ceremonial groundbreaking at the plant east of downtown Shanghai on Monday, Tesla now faces a race to start local production to take advantage of robust demand for electric vehicles in the world’s biggest auto market.
Chief Executive Elon Musk was on hand at the 210-acre site to press a button to “switch on” the plant, which at the moment is a field. Mr. Musk said he aims to build the plant “in record time.” Initial production of the Model 3 could start by the end of the year, he said, with the factory “achieving volume production next year.”
“It makes sense for Tesla to commit fully to becoming a leading EV brand in the world’s largest EV market,” said Bill Russo, chief executive of Shanghai-based consulting firm Automobility.
Tesla was the first foreign auto maker to take advantage of a recent rule change allowing foreigners to own their China business, instead of having to work with Chinese partners as previously required. That is a gamble, Mr. Russo said. “It will take billions of dollars to build a new footprint in China,” he said. “As 100% owner, this burden falls on Tesla.”
China is central to Telsa’s aim of graduating from niche startup to mainstream global auto maker. Tesla’s existing plant in Fremont, Calif., is ramping up to produce 500,000 annual capacity. The Shanghai plant is designed to make another 500,000 cars annually—a massive step up for a company that sold fewer than 14,000 cars in China in the first nine months of 2018, according to LMC Automotive, which tracks the auto market. The plant will build the Model 3, and the yet-to-be-launched Model Y small crossover.
Having control isn’t likely to free Tesla from China’s onerous bureaucracy nor safeguard its intellectual property, Mr. Russo warned. “Chinese authorities will likely try to influence everything from how Tesla stores customer data to its local supplier selections,” he said.
Good luck with that.
Musk does not do anything in record time. Nor does Musk produce a quality product. This will be interesting.
Mike “Mish” Shedlock
I thought Tesla didn’t even need a factory. Just throw some big tents over the mud and they’re good to go.
By the middle of this summer another credit crisis will ensue. The corporate bond market is going to spillover into everything else.
Has Mish again fallen as a victim to $TSLAQ cultist propaganda?
Just buy the Model 3 already and try it for yourself before posting more nonsense or even worse – buying put options. The car would be the best investment you will have ever made in your life.
True. You haven’t really grasped the true ownership experience of the Model 3 until your rear bumper falls off after a rainstorm and your touchscreen fails (rendering the car undriveable).
And who wouldn’t want to invest $45K or more in a car for which Green Car Reports notes “build quality was the worst we have seen on any new car from any maker over the last 10 years“?
Sounds like a solid investment to me.
You and Mish can keep commenting how bad is Model 3 from your ivory towers….
Or you can buy the Model 3 like I did.
I have driven mine in heavy rain, hot and freezing temperatures. Bumper is still there. Do you have any other concerns about my car?
And don’t you find it suspicious how “bumpers falling off” issue has disappeared without Tesla recalling the cars? Especially since it is rain season now? Either those were few isolated cases or they were staged.
The only valid criticism is that panel gaps vary by ~1-3mm. But it is hard to notice that unless you come with a caliper. I guess that is what “car experts” are referring as “build quality issues”.
I would prefer that those “car experts” rather focus on German car “quality issues” where they overuse plastic in drivertrain and at 60K miles you have to replace those plastic parts for 3K+ parts and labor. And, yes, I have owned a performance German car.
While I’m pleased that your $70,000 car hasn’t yet had its rear bumper come off, I don’t see how objectively noting the serious quality and economic problems with these products is being in “an ivory tower.”
You are commenting from Ivory Tower as in being separated from the facts and practicalities of the real world regarding Model 3. Talk with real Tesla owners and listen what they have to say about their cars. Don’t listen to Mark B Spiegel, Bob Lutz, Jim Chanos, Mike Shedlock or anyone affiliated with them.
And my Model 3 had MSRP of ~50K. Way below 70K. This just reinforces my suspicion that you are separated from facts.
And it seems you are over focusing on MSRP that you forgot that rational car owners should actually be paying attention to Total Cost of Ownership over X years. Within 5 -7 years my Model 3 will cost me just as much as Honda Accord after taking into accounts all savings. YMMV
How’s the total cost of ownership for the car if Tesla goes out of business?
If I want to take my Tesla to an independent mechanic, where can I find one?
Do AutoZone or Walmart sell parts for it?
It’s a toy for people who can afford to chuck $75K down the drain if their experiment doesn’t pan out.
It’s not a viable choice for the average person who buys and keeps a $25K car for ten years or longer.
And no, TCO on a $75K Tesla isn’t going to be anywhere near as low as TCO on a $25,000 Honda Accord.
LOL, Why Tesla is going out of business? How about Ford, GM, BMW, Mercedes going out of business instead? Don’t make such silly assumptions…
Sorry, but from now on I have to assume you are a troll. You still can’t independently verify facts.
If Ford, GM or Mercedes go out of business, one can easily buy spare parts for their car and continue operating it for years to come, at any automotive parts store.
Gas and oil can still be purchase easily without trouble. Even if the OEM goes kaput.
What stores carry automotive parts for Tesla cars? None.
Where are you going to charge up your car when all the Superchargers are ripped out and thrown away after the company goes broke? Not many other places.
As for the price, the only Model 3 currently available retails for $54K. Not $75K, but still about twice the cost of the average car, with the added bonus that the Tesla becomes an expensive paperweight if its manufacturer goes under.
You have a good doomsday imagination about Tesla going out of business. But I can easily beat you with my imagination.
What if WW3 starts and Middle East oil can’t make it to North America? You will not be able to buy gasoline at reasonable prices for your ICE car. Whereas EV owners will be able to power their cars with Nuclear, Solar, Wind and Coal electricity.
Stop that non-sense that Tesla is going out of business. And stop that non-sense that you won’t be able to buy Engine oil, Oil Filter, Spark plugs, Engine gaskets for Tesla in Autozone.
And I don’t think that Autozone or Walmart sell body panels for BMWs either. And last time I went to AutoZone they did not have BMW recommended coolant and Transfer case fluid either.
North America is the largest producer of oil and natural gas. I’m not too worried about that changing.
Meanwhile, Tesla has burnt huge piles of cash and has big debts coming due. The $1 billion that Larry Ellison put into the business — which everyone hyping the company can’t stop talking about — will all be consumed this quarter with a $1.2 billion cash payment coming due.
Orders for Tesla vehicles are also tapering off, now that natural demand for enthusiasts has been largely filled.
I wouldn’t bet on Tesla’s long term survival. And buying an extremely expensive luxury vehicle that requires Tesla’s continued existence to keep the vehicle functioning is a bet on their long term survival.
> The $1 billion that Larry Ellison put into the business — which everyone hyping the company can’t stop talking about — will all be consumed this quarter with a $1.2 billion cash payment coming due.
Sorry, but that is not how stock purchases in secondary market work. Tesla did not get 1B of cash in its accounts from Larry Ellison buying Tesla stock in secondary market long time ago. Please go short Tesla and let Darwin take care of everything else.
I’m quite aware of how equity deals work. I’m just pointing out that the company is torching gigantic bales of money, well in excess of what investors are contributing. Like Netflix and other tech Ponzi companies, when the cheap debt stops becoming available to fund cash burn, bankruptcy will be instantaneous.
When that day comes, Tesla owners will be stuck with a car that cannot be repaired or even charged in most places.
You are talking complete nonsense if you think that there may come a day when I won’t be able to charge my car.
I can already charge it from any 120V or 240V outlet. Or use Chargepoint stations that Leafs, Bolts and other EVs are using. Charging at home or work is more convenient than making a loop to gas station.
Tesla Supercharger network is icing on cake that most non-Tesla EV purchasers are envy of because they can’t go on 1000+ mile roadtrips. However, still those other EVs that are stuck charging at home or work are doing just fine. Why aren’t you concerned about them?
And you obviously don’t know what is Ponzi scheme, because according to your definition any startup that has CapEx expenses before product is ready would be a Ponzi. Nevertheless, Tesla is already profitable unless you did not read their last Quarterly earnings report.
I’m imagining pulling over every 350 miles on a road trip to charge up an electrical vehicle on a 120V plug. And laughing. A lot.
Are you laughing at I-pace, Leaf, Bolt owners who can’t go on roadtrips?
Meanwhile I have already been on 2000 mile roadtrips with my Model 3 and I am laughing at your ignorance about Tech.
I’d be crying if I’d paid 50 large (to start) for a car with charging station availability as part of the pitch, only to have all the chargers go offline and get ripped out when the manufacturer goes kaput and can no longer rent the facilities.
And I’ve not seen any Bolt or Volt owners on road trips. Mostly around town.
Lol, you take Teslas advantage and proclaim that it is actually a disadvantage for Tesla.
According to your logic we all should be deeply concerned about Jaguar I-Pace, Audi e-tron and BMW i-series that cost way more than Model 3. Yet does not have a supercharging network. All of them are town cars.
BTW, have you crunched the numbers at what profits Tesla flips electrons at their Superchargers for those customers who don’t have free/unlimited charging (ie majority of Model 3 owners)? Also, since Tesla has a trip planner built in their car Navigation system then they can optimize for way higher utilization/density than independent charging stations provided by Chargepoint.
It’s obvious the economics of the situation aren’t going to change your mind about your Tesla. Enjoy it, and I hope the numbers are wrong, the fantasies are true and Tesla remains in business.
My fantasies? Ok let’s fact-check our 10 comment exchange and your fantasies:
Those are easily fact-checkable statements that you should have known are false before sharing your opinion about Tesla. So tell me – How can anyone take your opinion/fantasy about alleged Tesla quality issues seriously after you have made so many wrong statements in just few comment exchange? And you don’t even own the car.
How will the Chinese economy be doing in a year?
And is the Chinese government going to provide a $20,000 per unit subsidy so he can MAYBE break even on each one sold?
Another deluded reader. Just read Sandy Munro’s report before you talk about profits per car.
I suspect that plant will never open. From the looks of the picture its a swamp.
Musk got a $ lifeline from Larry Ellison.
Musk himself doesn’t really produce much of anything. Neither is he supposed to. What he has done, at least so far, is sucker/convince enough people to hand those who are producing Teslas enough money to keep the show going for far longer than many had predicted.
If he can be as convincing to Chinese movers and shakers as he has been to American/Western ones, Tesla may do well in China as well. China does have the advantage of being, if possible, even more centrally planned than the West. And has even more riding on promoting BEVs, seeing as they have less in the way of an internationally competitive ICE sector vying for attention. Both of which should play to Mr. Musk’s proven strength: Selling dreams to those in the position to pay for them with other people’s money.
By the time that plant opens, China will have 3 copycat companies pushing cars out at half the price
Software will make it incredibly hard or even impossible for Chinese copy-cats to replicate the car.
Yea. Because the Chinese have never figured out how to copy something that uses software.
It is somewhat easy to pirate software for appliances or firmware chips that are not connected to the cloud.
However, doing so for devices that are connected to cloud is an order of magnitude harder, because:
While copycats may duplicate hardware, they will have to write software from scratch.
Chinese really have not been able to copycat any US cloud connected devices which I think was intentionally move by US companies.