The first fully-electric vehicles made in Tesla's Shanghai Gigafactory will officially be delivered to customers this week. The delivery of the US company's first batch of "made in China" vehicles marks a major milestone for Tesla as it is a maTesljor first step in its continued push to expand into the world's largest EV market.
Tesla announced on Friday last week that the first 15 units of its China-made Tesla Model 3 sedans will delivered to company employees today, December 30. The vehicles were all assembled at the company's multibillion-dollar plant located in Zheng Jia Lu, Shanghai.
Tesla CEO Elon Musk is banking on the company's Shanghai facility to become its jumping-off point for its strategic entry in the Chinese market and its hopes of stealing some of the market share away from domestic players such as NIO and Xpeng Motors.
The facility, which is also called the Tesla Gigafactory 3, will mainly be producing Tesla Model 3 and Tesla Model Y vehicles. Part of the factory will also be dedicated to producing battery cells for both vehicles. Construction of the massive complex is partially complete and Tesla expects it to have an initial production rate of around 250,000 electric vehicles per year.
The Shanghai Gigafactory, which had broken ground earlier in the year, was one of the fastest-built facilities of its kind. Musk even mentioned that he has never seen a factory-built so quickly. The rapid construction of the facility was partially helped by massive support from local and national government agencies as well as support from local institutions.
Last week, Chinese officials announced that they will be including the company's China-built Model 3 vehicles to its list of cars that are exempted from a 10 percent purchase tax. The exemption along with the possible application of a government subsidy of as much as $3,600 per vehicle could significantly reduce the cost of Tesla's products in China.
Analysts have predicted that Tesla could very well lower the price of its locally assembled units next year. The company initially announced that it would be pricing its Tesla Model 3 by about $50,000. A lower price would give Tesla a big edge over its competitors, as most Chinese consumers do tend to associate the company's brand with quality.
The success of Tesla's facility in China will closely be watched by investors as it could make or break the company's performance in the financial markets. Tesla's stocks went through quite a roller coaster ride throughout the year, but it looks like it will be ending on a high note thanks to the enthusiasm over its performance in China. Last week, the company's stock prices breached the $420 and $430 mark, exceeding analysts' forecast and expectations.
