Tesla China Expands Production Again

According to the Environmental Information Release Platform of Shanghai Enterprises and Institutions, a production line optimization project for the second stage of Tesla Gigafactory Shanghai (Phase I) was completed on September 1, as reported by Beijing News on September 19. Tesla is mainly increasing the production cycle of its existing factory to realize optimization.

According to Tesla’s estimates, after the completion of this production line optimization, 4,000 employees will be added, bringing the total number of workers at the facility to 19,000. This project is further expanding the production capacity of Gigafactory Shanghai, making it Tesla’s largest in the world. According to the company’s financial report for the second quarter of this year, the annualized production capacity of Gigafactory Shanghai exceeded 750,000 vehicles, followed by the firm’s California factory, which has an annualized production capacity close to 650,000 vehicles.

Employees work at the Tesla Gigafactory in Shanghai, east China. (Source: Xinhua)

According to statistics from the China Passenger Car Association (CPCA), Tesla China sold 28,200 vehicles in July this year, a sharp drop of 64.2% from 78,900 vehicles in June. According to analysis by the CPCA, the firm’s expansion of production has affected the production and sales of Tesla in China.

In August, Tesla’s wholesales performance in China reached 76,965 units, an increase of 172.8% from the previous month, indicating that its production line optimization project has ended. On August 15, the company announced that the millionth vehicle produced at Gigafactory Shanghai was finished, and that the localization rate of the industrial chain of the Shanghai factory had exceeded 95%.

In order to stimulate sales volume in the third quarter, Tesla China recently introduced a limited-time insurance subsidy policy to the country. Beijing News learned from Tesla China’s sales staff that if a car owner chooses to buy insurance from the company’s store, a subsidy of 8,000 yuan ($1,142) will be offered, which can be directly used to reduce the car price. This activity is aimed at all Tesla Model 3s and Model Ys made in China.

However, this is the first time that Tesla has offered a price reduction in a disguised way for its Model 3s and Model Ys after several price increases in China so far in 2022. When the news came out, it caused dissatisfaction among some existing car owners.

SEE ALSO: Delivery Time for Tesla Model Y and Model 3 Made in China Cut to 1 Week

In addition, Reuters reported that Tesla China is planning to close its showrooms in cities like Beijing and move them to the periphery of cities to reduce costs. In response, the Chinese division of Tesla responded to Yicai on September 19, saying that domestic sales channels are still operating at the normal pace of expansion.

With its strong brand power, supply chain control and sales performance, Tesla appears set to further intensify competition within the Chinese new energy vehicle market, with a series of moves such as price reduction, production expansion and cost cutting.