Tesla puts Shanghai expansion plans on hold
Tesla has apparently put on hold plans to buy additional land to expand its Shanghai plant and make it a global export centre. A Reuters report writes that this is due to the political situation between China and the USA.
With 25 per cent tariffs on imported Chinese electric cars, which are being imposed in addition to the existing levies under former US President Donald Trump, Tesla now intends to limit the share of Chinese production in its global output. Reuters cited two people familiar with the events with this explanation. Four sources had confirmed to the news agency that Tesla does not want to acquire any more land around the Giga Shanghai.
In March this year, Tesla apparently already refused to buy a plot of land across the street. This is said to be about half the size of the current plot, which measures around 80 hectares. In a statement to Reuters, Tesla said the Shanghai plant is “developing as planned”. The Shanghai municipal government, considered a big supporter of the Tesla plant, has not responded to enquiries on the matter.
Insiders quoted by Reuters said that Tesla had been considering expanding exports of the base version of its China-built Model 3 to other markets, including the US. The Model 3 Standard Range+ would thus have been built only in Shanghai and not in parallel in Fremont, as is currently the case. The main Californian plant would then have focused on producing the Model 3 Long Range and Performance for the US and export markets.
The Tesla plant in Shanghai is designed to produce a maximum of 500,000 vehicles, and at its current stage of expansion can build 450,000 Model 3 and Model Y units per year. Some of the areas that are currently used as a car park should still be able to be used for production facilities in order to reach the maximum capacity. By expanding the plant through the purchase of additional land, Tesla could have increased production by 200,000 to 300,000 additional electric cars.
According to Reuters, Tesla’s sales in China amounted to around three billion US dollars in the first quarter. This is not only a threefold increase compared to Q1 2020 but already accounts for almost a third of total sales. Tesla had sales of 10.39 billion dollars in the first quarter, according to the annual report.
Joe Biden plans to encourage manufacturing electric cars in the USA in his $2 trillion infrastructure plan. Car manufacturers are to be supported in establishing domestic supply chains for raw materials, for example, and in converting factories for the production of electric vehicles and batteries. Consumers are to receive subsidies and tax incentives for the purchase of American-made electric vehicles. With these kinds of investments is not surprising then that the US government would view the export of electric cars made in China to international locations critically. Currently, the Model 3 made in China is exported to Europe. This will presumably change when the Giga Berlin factory is up and running in Germany.
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