Tesla Inc is to start delivering China-built vehicles on Monday, a major milestone for CEO Elon Musk’s company as it mounts a push to expand in the world’s largest electric vehicle market.
The first 15 units of Model 3 sedans assembled at Tesla’s new multibillion-dollar Shanghai plant — its first outside the US — are to be delivered to company employees on Monday, a Tesla representative said by telephone yesterday.
Musk is counting on the China plant to help build on momentum for the company in the world’s largest market both for electric vehicles and autos in general.
The Model 3 is to compete with electric cars from local contenders such as NIO Inc (蔚來) and Xpeng Motors (小鵬汽車), as well as global manufacturers including BMW AG and Daimler AG.
The Shanghai Gigafactory, which only broke ground at the start of this year, is a crucial test of Musk’s bid to keep his automaker profitable as he bets big on Chinese appetite for electric vehicles.
Originally just a muddy plot about a 90-minute drive away from Shanghai’s city center, Musk has said that he has never seen a factory built so quickly.
With Tesla’s volatile stock price and strained finances, investors will be watching closely how the ramp-up unfolds.
The multibillion-dollar investment is to be a deciding factor to determine whether Tesla will be able to take on local competitors and fend off challenges by the likes of Mercedes-Benz, BMW and Audi.
The launch would also provide clues about Tesla’s ability to truly go global. The company is planning to follow up with a production facility in Europe, where it is enjoying burgeoning sales growth in several markets.
Musk has predicted that Tesla would make at least 1,000 vehicles per week in Shanghai by the end of the year — a volume the company’s original factory in California spent months trying to hit — and has said that a weekly rate of 3,000 is a target at some point.
Earlier yesterday, the China-built Model 3 was included on a list of vehicles qualifying for an exemption from a 10 percent purchase tax in the country.
The locally built Model 3 would be priced from about US$50,000, Tesla said in October.
Further helping Tesla, the China-built model this month qualified for a government subsidy of as much as about 25,000 yuan (US$3,572) per vehicle.
The company might lower the price of the locally assembled sedans by 20 percent or more next year as it starts using more local components and reduces costs, people familiar with the matter have said.
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