Tesla Unveils the First Model 3 Sedans Made in China
Tesla's Shanghai Gigafactory first broke ground in January 2019, now just nine months later, the first Model 3 electric sedans have rolled off the assembly line.
Tesla unveiled its first run of vehicles built in China late last week, an important milestone for the company as it prepares to start sales of domestically made electric sedans in China. The Deep Metallic Blue-painted Model 3s include Tesla badging in Chinese characters, differentiating them from their U.S. built counterparts.
Select local media were invited late last week to test drive the first China-made Model 3s, which start at about 355,800 yuan ($50,750) and includes the basic version of Tesla's Autopilot in the price.
The first batch of cars is part of the final preparations at the factory, before Tesla starts ramping up production. Tesla is aiming to build around 1,000 Model 3s per week by the end of the year. Bloomberg reported that Tesla is working with local authorities to obtain manufacturing certification and hopes to get it be year end, Tesla Chairman Robyn Denholm said last week in Shanghai.
The Shanghai Gigafactory is Tesla's first assembly plant outside of the U.S. and the first wholly-owned foreign auto factory in China. The factory gives the electric automaker access to the Chinese auto market, which is the world's biggest and an important market for Tesla in order to maintain sustained profitability.
Previous rules required foreign automakers to setup any joint venture with an established Chinese partner. Automakers were also limited to a 50% ownership in any joint venture with a Chinese company.
U.S. automaker General Motors established its own joint venture SAIC General Motors Co., Ltd. (SAIC GM) on June 12, 1997. The joint venture has four major manufacturing bases with eight vehicle plants and four powertrain plants across China. Although the rules have been lifted, GM is not increasing its stake in the joint venture, stating its long and prosperous working relationship with SAIC.
By building cars in China, Tesla no longer has to worry about the threat of steep import tariffs affecting its sales. Higher tariffs being considered by Beijing as a result of the ongoing trade war between Beijing and the U.S. An additional 25% tariff on U.S. autos was scheduled to go into effect on Dec 15, 2019. However China agreed to postpone the tariff hike while negotiations continue between the two sides.
Tesla also received an exemption from China's 10% purchase tax, which is an additional incentive for Chinese customers looking to buy an electric car.
Other than the Chinese character badging, the China-made Model 3s are the same as the ones produced at Tesla's Fremont, California factory, with the exception of a slightly smaller battery pack. Future over-the-air updates will be identical to the ones that Tesla's U.S. and international Model 3 versions receive, including all of the security and safety system updates.
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