[ad_1]
\n<\/p>\n
(Bloomberg) — Tesla Inc. kicked off production in China, marking a major step in Chief Executive Officer Elon Musk\u2019s global push for electric-vehicle domination and heralding what could be the dawn of real competition in the world\u2019s largest EV market.<\/p>\n
Musk presided over a ceremony on Tuesday at a new multibillion-dollar plant near Shanghai \u2014 its first outside the U.S. \u2014 where the American company handed over the first China-made Model 3 sedans to the public, the first one being a white sedan going to a man from the nearby city of Wuxi. Technically, deliveries began last week but those were to employees.<\/p>\n
Local production could help Musk build on recent momentum for the company in the country, which is also the world\u2019s largest market for normal gas guzzlers. Tesla is storming into China with prices that aren\u2019t much higher than those local manufacturers such as NIO Inc. and Xpeng Motors, while undercutting global giants such as BMW AG and Daimler AG.<\/p>\n
Musk also introduced the Model Y crossover for the Chinese market, saying that demand for the vehicle will probably outstrip that of Tesla\u2019s all other models combined. Other plans include forming a design-and-engineering center in China so that Tesla can eventually develop a brand new car from there, he said.<\/p>\n
The Chinese plant, which was completed in record time as it sped through approvals and construction, represents a cornerstone of Musk\u2019s plans to make Tesla a truly global carmaker. The company in November announced plans to build a factory in the middle of Germany\u2019s automotive heartland to cater to burgeoning European demand for EVs.<\/p>\n
Musk\u2019s flagship company, named after famed inventor Nikola Tesla who died 77 years ago today, will now need to avoid a repeat of the glitches it experienced in its original car factory in California, where the company went through months of what Musk called \u201cproduction hell\u201d as it ramped up Model 3 production. After consistently falling well short of the CEO\u2019s ambitious targets, the electric-car maker burned through billions of dollars and came within weeks of running out of money.<\/p>\n
Lately, Tesla shares have been on a tear since the company reported a surprise quarterly profit in late October. The carmaker is on much steadier footing, having worked out the kinks that limited initial production of the Model 3 and managing to far outpace sales of many other automakers\u2019 electric vehicles in the U.S.<\/p>\n
The China plant is already assembling more than 1,000 cars a week, and aims to double that rate over the next year, Song Gang, the manufacturing director at the facility, said on Dec. 30. The company has said it plans to ramp up production to 150,000 Model 3 vehicles a year, of about 3,000 a week, when the first phase of the factory is completed and the company plans to boost production capacity to 500,000 a year after the following phase, although it isn\u2019t clear when exactly Tesla expects to achieve those goals.<\/p>\n
Musk\u2019s charm offensive in China has appeared to pay off. Originally just a muddy plot about a 90-minute drive away from Shanghai\u2019s city center, the China plant has quickly come online since it broke ground at the start of 2019. It took twice as long for Tesla\u2019s Gigafactory near Reno, Nevada to begin churning out batteries.<\/p>\n
Back in China, Tesla has been winning various concessions from local authorities ranging from approvals to preferential loans \u2014 all the more notable given the trade war with the U.S.<\/p>\n
Various government officials including Mayor Ying Yong and Zhu Zhisong, deputy secretary-general of the Shanghai municipal government, were among the dignitaries attending Tuesday\u2019s event. Vice Mayor Wu Qing said at the event that no foreign company has invested in a bigger manufacturing facility in the country.<\/p>\n
Additionally, the locally built car was included last month on a list of vehicles qualifying for an exemption from a 10% purchase tax in China. It also qualified for a government subsidy of 24,750 yuan ($3,560) per vehicle.<\/p>\n
The subsidies have helped Tesla cut prices, with the company announcing last week it would reduce the starting price of the Model 3 by 9% to 323,800 yuan and down to 299,050 yuan after subsidies. Prices could go down further as people familiar with the matter have said Tesla is considering further lowering the price of the sedans by using more local components and reduces costs.<\/p>\n