Recent reports revealed that electric car manufacturer Tesla announced that the company is planning to produce 3,000 Tesla Model 3 cars each week out of its China factory located in Shanghai. The report cited a regulatory filing by Tesla to the United States Securities and Exchange Commission.
Based on the filings, Tesla is boosting its Model 3 production to around 10,000 units a week. This is a massive undertaking which means that one in every vehicle rolled out by Tesla will be made in China.
In a history event for Tesla in July, the Shanghai government confirmed that the company establishes a wholly owned facility in the city. The announcement also confirmed that the new facility has the capacity to churn out 500,000 Tesla cars every year. Tesla's investment in Shanghai is the biggest foreign manufacturing investment the city has received.
Based on market data, China is Tesla's biggest market outside of the United States. On this massive market, Tesla has only fielded two particular models, the Model X and the Model S. As the company's sales figure started to hit peak heights, trade frictions between China and the United States started to heat up resulting serious market concerns.
In China, the retail price of a Tesla Model S jumped at 139,000 yuan or about $20,000. This is a direct result to the additional 25 percent tariff imposed by China on various U.S. goods in a countermeasure to the tariffs imposed by its western rival. Despite the clouding of the market due to trade issues, Tesla is still committed to the Chinese market.
Regarding its newly approved facility in Shanghai, Tesla announced that it will take two years for the facility to be fully operational and commence production. Tesla added that by 2019 the company should be able to start transferring car parts into the facility. All Tesla vehicles that are made in China will be exclusively offered to the Chinese market.
With its booming middle class and economy, China is considered by many analysts as the world's largest automobile market. The country's massively untapped market is what motivates international companies and brands to shift their focus despite China's strict market regulations.
In 2017, car sales in China peaked to about 24.72 million passenger cars. Of this figure, about 777,000 new-energy vehicles. Data also revealed that Tesla was able to sell 17,000 cars in China in 2017. That is an improvement of 51 percent compared to its sales figure in 2016.
