Tesla CEO Elon Musk went into some detail about the company’s plans to set up a manufacturing unit in China. Earlier this month the Chinese government gave Tesla Motors the green light to start a plant in the PRC, but Musk gave more information at the company’s Q3 earnings call yesterday.
Putting a ballpark figure on production capacity, Musk indicated somewhere in the neighborhood of “at least a couple hundred thousand vehicles per year, maybe more.” He also noted that the timeline of three years wasn’t set in stone.
Tesla’s China factory will primarily be built for the Model 3, and that’s clear because Musk wants to make cars more affordable to the middle class Chinese population, which is expected to be about 76% of the population by 2022. However, it will also produce a certain number of Model S and Model X, since there’s strong demand expected from higher income groups as well.
Musk also told investors that there won’t be any Capex towards the project until at least 2019, an important point considering the losses the company posted during the third quarter of 2017.
Tesla will soon need additional cash for its Model 3 ramp up plans, and Musk clearly didn’t want to upset an already teetering apple cart by indicating a large outlay for the China factory.
Another point to note is that Tesla will be going it alone rather than partnering with a local automaker. A lot of outside companies get into such partnerships to avoid the 25% import tax that’s levied on foreign carmakers, but Tesla seems to want to do this independently. That means they won’t get the tax break, so it’ll be that much harder to bring the price of their vehicles down to mass market levels, which is their ultimate goal in the first place.
It’s still very early days, so there will be lots of news about Tesla’s China factory plans in the coming months and the months leading up to their first investment in the project.
Thanks for visiting. Please support 1redDrop on social media: Facebook | Twitter
