Published: Wed, July 11, 2018
Markets | By Erika Turner

Tesla hopes to produce 500,000 cars per year at new Shanghai plant

Tesla hopes to produce 500,000 cars per year at new Shanghai plant

USA carmaker Tesla Inc has hiked prices on its Model X and S cars by about 20 percent in China, the first automaker to do so in the world's top automotive market in response to mounting trade tensions between the countries.

Under the agreements, Tesla will independently open a plant integrating research and development, manufacturing and sales functions, according to news website Knews, which is affiliated to state-owned Shanghai Media Group. The factory and its output are planned to dwarf Tesla's current US production capabilities, and it comes after a year of negotiations between the electric automaker and Shanghai local government in China.

"The Shanghai municipal government will fully support the construction of the Tesla factory", authorities said in a statement, which could help Tesla build the factory sooner rather than later.

Tesla sold 14,779 vehicles in China previous year, according to data from LMC Automotive.

The signing ceremony was attended by Tesla chairman Elon Musk, Mayor Ying Yong and other Chinese officials, according to the city government. The company's Model 3 unit seemed destined for what Musk called a "production hell", with the company having several product line suspensions in order to reevaluate manufacturing practices in the Fremont facility.

Tesla didn't respond to a request for comment on the price rises. Musk, 47, said more than two years ago that he expected Tesla to produce more than 500,000 vehicles in 2018 at its lone car-assembly plant in Fremont, California, but the company is well off that pace because of the Model 3's slow start. Tesla has been burning through billions of dollars as it's struggled to ramp up manufacturing of the Model 3 sedan.

Trump picks conservative Brett Kavanaugh for Supreme Court
If confirmed, the nominee will create a clear conservative majority on the nation's highest court for generations to come. The American Family Association has already expressed its opposition to Kavanaugh , calling on the Senate to reject him.

Tesla CEO Elon Musk was in Shanghai Tuesday to appear in a joint announcement with the city government.

Musk's visit to China and a potential deal on a Chinese factory for Tesla is coming at a crucial moment for the U.S. EV maker, which has reportedly had to significantly raise the retail prices of the vehicles it sells in China, due to the latest tit-for-tat trade tariff spat between the United States and China. Musk added that he wants the Tesla factory to add to what he called "the beauty and energy of Shanghai".

The move is the earliest indication of how much higher Chinese tariffs on certain US imports will flow through to buyers, with other automakers likely to follow suit or shift a greater portion of production to China.

Citing Tesla's lower than expected Q2 delivery numbers and higher costs, Brinkman lowered Tesla's EPS forecasts saying he now expects a Q2 loss per share of $2.80, compared with his previous estimate for a $2.45 loss per share. Electrek also says stores will get Performance Model 3 vehicles by the end of the month.

Auto brands in China are required to make electric vehicles at least 10 percent of their sales starting next year or buy credits from competitors that exceed their quotas. That level would be more than double the current USA market, where new light vehicle sales run at about 17 million vehicles a year.

Like this: