Accelerating Model 3s production in Shanghai to shore up investors’ trust
U.S. electric carmaker Tesla has started building a battery factory in Shanghai after wrapping up construction of its Phase-1 factory complex, where the cars will be assembled, and it aims to finish the second facility more quickly.
It is also reportedly on the verge of producing its Model 3s in the Shanghai plant, which one expert said Tesla is "in a rush" to do as a way of easing capital pressure and shoring up market confidence.
On Monday afternoon, at the Gigafactory 3's Phase-2 area, the Global Times saw that the land had been paved and construction work was at various stages.
A battery plant will be built on the site, a person close to the Gigafactory 3's construction team surnamed Li told the Global Times.
The battery factory will be built more quickly than the Phase-1 area, as it took only a few weeks for workers to erect pillars and roof trusses for Phase-2, while erecting roof trusses in the Phase-1 area took months, according to media reports.
Feng Shiming, a veteran car industry analyst, told the Global Times on Monday that the first batch of vehicle batteries would be fully assembled at the Shanghai factory on October 30, based on what he had heard from some Tesla employees.
The company is also pushing forward with production of its Model 3s.
According to a report by yicai.com on Sunday, there has been general speculation in the market that Tesla will begin production at the Gigafactory 3 this week.
Tesla hadn't clarified its production plans to the Global Times as of press time.
Li said that the production lines are complete and Tesla is debugging the equipment. He also said that recently, he saw Tesla cars running on test tracks near the factory.
He said he didn't know the exact start of production time.
Feng predicted that formal, mass production at the Shanghai factory will only start after the Spring Festival holidays in January next year.
The factory built in the first phase will merely assemble parts shipped from the U.S., Feng said.
It will take a certain amount of time to talk about achieving its mass production goal, Feng told the Global Times.
A Tesla salesperson told the Global Times on Monday that if one places an order for a locally produced Model 3 right now, the vehicle will be delivered within six to 10 months.
But Tesla is doing all it can to mass produce Model 3s in Shanghai as soon as possible to shore up investors' trust, experts said.
"The price of the Model 3 is relatively low, so Tesla needs to start sales in China as quickly as it can, and sell the car in large volumes to recoup its capital investment," Feng told the Global Times. Tesla's financial issues and the worries that they have caused investors have been a hot topic for Western media.
Industry insiders expressed pessimism over whether Tesla could make a profit from local Model 3 sales, as the more affordable models appeal to price-sensitive groups who will be more picky about quality and manufacturing than traditional affluent buyers who appreciate Tesla's technology.
"The new group of buyers regards Tesla as a replacement for internal-combustion vehicles. So could Tesla, which has some weakness in the area of craft, convince them to buy? The bargains will be longer," Feng asked. He indicated that there will be a surge in marketing cost after locally-produced Model 3s are put into the market.
