Tesla plans to begin work next month on a new auto plant in Shanghai, China. Two people with knowledge of the matter told Reuters that this is part of Tesla's plan to more than double its production capacity in China to meet the growing demand for its electric vehicles in the country and export markets.
Once Tesla's new factory is fully operational, the world's largest electric car maker will have the capacity to produce up to 2 million electric vehicles per year at its expanded facility in Shanghai, which has become the company's main export hub.
Tesla's new plant in China will be located near its existing production base in Lingang in the Pudong New Area of Shanghai. Once given the green light, the Chinese expansion would provide Tesla with an EV-dedicated production capacity on par with more established car brands in the world's largest auto market.
In comparison, Toyota produced 1.6 million vehicles in China last year. General Motors managed to produce 1.4 million vehicles with its major Chinese partner SAIC Motor Corp in 2021. Volkswagen plans to have a production capacity to make 1 million electric vehicles in China by 2023.
Expansion plans for Tesla's existing plant in Shanghai aim to put the company on track to produce around 1 million units in China this year. However, this target figure depends on the availability of parts, which is a problematic issue right now due to ongoing supply chain issues.
The cost of Tesla's planned expansion in Shanghai and the automaker's timetable for its completion were not immediately known. Tesla started production at Gigafactory Shanghai less than a year after breaking ground in China. The plant plays an integral role in Tesla's vehicle production, with the Shanghai factory making the company's popular Model Y crossover and the Model 3 sedan.
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According to one of the sources, Tesla has projected to take its weekly production at the Shanghai plant in the coming months to around 22,000 EVs. Based on that target production rate, Tesla would be producing about 1.1 million electric vehicles over a year, which is more than double the factory's original projected capacity.
City government officials of Shanghai did not immediately respond to a request for comment regarding Tesla's new plant in the area. Shanghai has long been a supporter of Tesla's plans to establish a wholly-owned factory in China. The Shanghai facility would be the first foreign auto plant in China that is not required to create a joint venture with a Chinese partner.
In a regulatory filing with Shanghai earlier this week, Tesla announced that it planned to expand parts production at its factory in the Chinese city. Tesla will hire additional workers and run its factory for longer in a day to help the company meet growing export demand for its vehicles.
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