Tesla is hoping Model 3 production in Shanghai will bolster sales in China.
Tesla’s $2 billion plant under construction in Shanghai is expected to begin producing Model 3 sedans by the end of the month; however, it’s unclear if that will be soon enough for it to help the EV maker hit its full-year production targets.
The plans call for the site to produce 1,000 Model 3 sedans a week before the end of the year; however, regulatory issues, problems with labor and suppliers and other potential bottlenecks may push back the time the plant reaches that magic production number.
The California-based EV maker pushed for the plant to help it avoid costly import tariffs, boosting sales in EV-hungry China as well as making for an ideal launch pad for other Asian countries.
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In the short term, getting the plant up and running a full speed quickly is critical to the company’s plans to reach its total production rate at an annualized 500,000 vehicles by the end of this year.
“We aim to start some production in October, but the actual production volume depends on many factors including car orders we received, performance of newly hired workers, supply chain and so on,” a Tesla source told Reuters.
The Tesla Model 3 will be the only product in Shanghai.
“It’s unclear when we can reach the 1,000-2,000 units per week target,” the person said, declining to be named as he was not allowed to speak to media. Tesla did not respond to requests for comment.
(Tesla Cutting Prices on China-Built Model 3)
Despite ongoing tensions between the U.S. and China about trade issues, Tesla is looking to get some short-term sales benefits from the new plant, which received its final approvals from the government in the last two weeks.
That bump might not be as great as expected as EVs, or New Energy Vehicles as they’re classified in China, aren’t selling at the blistering pace they once were when they enjoyed substantial incentives from the central government.
Sales of new energy vehicles fell in August, the second month in a row, and are expect slow down to 1.5 million vehicles from a previous forecast of 1.6 million, according to an industry association, Reuters reported.
However, Tesla outpaced the market in China. Through July, its sales have risen 98%, largely due to the Model 3, according to research firm LMC Automotive.