Tesla Plans to Export its China-made Model 3s to Asia & Europe, Sources Say

Tesla Plans to Export its China-made Model 3s to Asia & Europe, Sources Say

Author: FutureCar Staff    

Electric automaker Tesla is planning to export Model 3 sedans built at its Shanghai factory to Asia and Europe, according to sources, Bloomberg reports. The sources declined to be named since they are not allowed to speak to the media. 

The California company began delivering the first Model 3's built in China in December of last year. China-built Model 3s for delivery outside the country likely will start mass production in the fourth quarter, the people said, asking not to be identified because the details are private.  

By next year, Tesla plans to sell vehicles to Japan and Hong Kong, one of the sources said. They also told Bloomberg that Tesla is targeting Singapore, Australia and New Zealand, as well as Europe. Tesla may also need to make changes to its assembly set-up in Shanghai for those right-hand drive countries. 

Shipments could start as soon as the end of this year or early 2021, according to the people.

Tesla did not immediately respond to a request for comment.

"Exporting Model 3s to Europe would take advantage of China's lower production cost base in a bid to improve profitability," said Michael Dean, a Bloomberg Intelligence analyst. "It would follow BMW, who will soon begin exporting its new iX3 BEV from the region."

Tesla's Shanghai factory was built in record time, taking only around nine months to complete. Construction began in Jan 2019. The factory gives Tesla an advantage in China, since the company is not subjected to tariffs on imported vehicles in China. The country is the world's biggest auto market.

Currently Tesla is expanding its production capacity in China to build the new Model Y crossover. The automaker is also adding additional production lines to produce more battery packs, electric motors and motor controllers. Local sourcing will help Tesla lower expenses and make its vehicle more affordable.

Tesla aims to build 150,000 Shanghai-made Model 3 vehicles this year. However documents submitted by Tesla in March indicated that that company intends to increase annual production at the Gigafactory 3 to between 250,000 and 260,000 vehicles.

Tesla sold around 11,800 vehicles in China last month, so production capacity currently out weighs demand.

Tesla is also facing new competition from a new crop of electric vehicle startups in China, including Xpeng Motors and NIO Inc. NIO Inc. has been selling roughly 3,500 EVs per month in China, but its sales are on the rise. 

Like Tesla, both NIO and Xpeng automakers are publicly traded companies in the U.S. NIO launched its IPO in Sept 2018 and Xpeng's IPO was in August. Xpeng's Motors' vehicles sell for around half that of Tesla models in China. 

With the exception of the China-built Model 3s, all of Tesla's other vehicles are built at its factory in Fremont, California and exported around the world. Tesla also has two more factories in the works. 

Tesla's factory in Berlin, its first in Europe, is currently under construction, as is its second U.S. factory in Austin, Texas. The Texas factory will build Tesla's upcoming Cybertruck.

The global market for electric vehicles is expected to increase around 7% this year.

FutureCar Staff
FutureCar Staff
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