Tesla, Inc. (NASDAQ: TSLA) has been approved to manufacture electric vehicles in China, the China’s industry ministry stated on Thursday. Managing director of Automotive Foresight, Yale Zhang said “the green light is fully given to Tesla for production in China.” Tesla is permitted to begin production immediately.
The company’s first auto factory overseas is located in Shanghai at a whopping cost of USD 2 Billion. It is still uncertain whether or not Tesla will meet production targets for the end of the year due to several factors such as labor, suppliers and order issues. The electric vehicle maker plans to produce a minimum of 1,000 model 3s per week from the Shanghai factory by year end. The strategic move in Shanghai was to avoid higher important tariffs that impact U.S. vehicles. China has excluded Tesla models on a 10% car purchase tax regarded on August 30th.
“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.
“It’s unclear when we can reach the 1,000-2,000 units per week target,” the source said, declining to be named as he was not allowed to speak to media.
JL Warren Capital wrote in a note to the firm’s clients:
“Small scale testing is to start in Q4 with meaningful production increases not expected until Q1 and Q2 2020, with the goal of 2,000 units per week in June 2020. Unlike the fully automated process in California, GF3 will be semi-automated, as the local labor cost is still lower than full automation. Due to the nature of semi-automation (including human fatigue, work breaks needed etc) this phase of factory ramp up at the GF3 has a maximum of ~2,000 units per week by mid of 2020, vs. ~5000 units per week in California.”