Musk Aims to Produce 500,000 Cars Annually in China in 2020

Hooray! Tesla broke ground on a factory in China. Elon Musk's goal is a lofty one.

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

Comments
No. 1-10
KidHorn
KidHorn

I thought Tesla didn't even need a factory. Just throw some big tents over the mud and they're good to go.

Casual_Observer
Casual_Observer

By the middle of this summer another credit crisis will ensue. The corporate bond market is going to spillover into everything else.

Not_Wagner
Not_Wagner

Nor does Musk produce a quality product.

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.

bradw2k
bradw2k

How will the Chinese economy be doing in a year?

Bam_Man
Bam_Man

And is the Chinese government going to provide a $20,000 per unit subsidy so he can MAYBE break even on each one sold?