Tesla China: Catching up on Elon Musk's recent trip and rapid progress at Gigafactory 3
Things are moving incredibly fast for Tesla in China. A couple of weeks ago, the Gigafactory 3 in Shanghai received its permit from the local authorities to begin operations, and Tesla released some low-res interior shots that appeared to show a legion of robots and a huge stamping machine already installed.
Above: A look at the design of the Tesla Model 3 Performance 'Power Sports' aero wheels in China (Twitter: Jay in Shanghai)
Now it appears that production is much closer than anyone suspected - Tesla has presented the first Model 3 produced at Gigafactory 3. The prototype was on display at the 2019 World Artificial Intelligence Conference in Shanghai, where Elon Musk shared a stage with Alibaba Group co-founder Jack Ma - the two debated the future of AI, and Musk predicted that computers “will surpass us in every single way.” On his two-day trip to China, Musk also met with the Chinese Transport Minister in Beijing.
Tesla’s Chinese ramp-up is moving at a speed that’s absolutely unprecedented in the auto industry. China’s notoriously sluggish bureaucracy approved Gigafactory 3’s “comprehensive acceptance certificate” in only 3 days (as reported by the Global Times), apparently setting a new record. Now, just over 7 months after construction began, Tesla seems to have begun pilot production (although, as InsideEVs noted, we don’t know how much of the car on display was produced locally).
In addition, during Musk’s trip, the Chinese government announced that it has added Tesla’s Model S, Model X and Model 3 to a list of EVs that qualify for exemptions to the country’s 10% vehicle sales tax (as reported by Nikkei). No reason was offered for the move, which took China-watchers by surprise. As Electrek noted, imported vehicles are generally not eligible for the exemption.
Above: More on Elon Musk's latest trip to China and Tesla's rapid progress taking place in the region (YouTube: Bloomberg Technology)
The move came just as Tesla had increased prices of its vehicles in China by about 3% in order to compensate for exchange rate fluctuations and the on-again, off-again trade war. The California carmaker announced that the tax exemption could save buyers up to 99,000 yuan ($13,957) on a new Tesla.
Gigafactory 3 is of critical - some would say existential - importance for the California carmaker. Tesla is counting on massive sales growth in the world’s largest auto market, and producing cars locally will deliver several big advantages. The company will save on shipping costs, be insulated from increasingly unpredictable tariffs, and earn priceless goodwill by hiring local workers and sourcing components from Chinese companies.
Tesla hopes to begin production in early Q4 of this year, and to quickly ramp up volume, starting with 3,000 vehicles per week in the first phase. “This will be a simplified, more cost-effective version of our Model 3 line with capacity of 150,000 units per year - the second generation of the Model 3 production process,” wrote Tesla in its Q2 shareholders letter.