Tesla’s Path to Gigafactory 3 in China

Tesla China Gigafactory

The Timeline

January 2014 – Tesla launches Model S in China. A week after the launch Tesla CEO Elon Musk says that Tesla will eventually build a factory in China for local production. Model S with an 85-kWh battery pack starts at $121,000.

April 22, 2014 – Tesla CEO Elon Musk hands over Model S keys to the first nine customers in China. Tesla opens its first supercharging station in front of Tesla’s office in Northeast Beijing.

December 2014 –  Tesla underperforms in China by selling 3,831 Model S in 2014. “Tesla Chief Executive Elon Musk told The Wall Street Journal he would consider it a success if Tesla were to sell 5,000 vehicles or more in China in 2014.”

Jan 2015: Elon Musk tells investors that Tesla sales in China were “unexpectedly weak” in the fourth quarter. Tesla slashes its headcount in China over the next couple of months. Chinese media reported that Tesla will cut 180 jobs, a third of the company’s workforce in the country.

September 2015: Tesla continues its underwhelming performance in China, selling just 3,025 cars in the first nine months of 2015, well below its target of 10,000 cars for the year. Elon Musk stays committed to improve Tesla’s performance in the country.

Elon Musk tells Xinhua News Agency that “Tesla sales in China could be on track to match U.S. sales within five or six years.”

January 2016: Tesla continues to build its infrastructure network in China. “Tesla sets up 15 stores in seven major cities in Greater China, over 340 Superchargers and over 1,600 destination chargers. ”

Elon Musk makes it clear that Tesla needs to start local production to cut the price of Tesla cars and boost demand.

July 5, 2016 – Tesla launches Model X 75D in China. The SUV with 75kWh battery pack and 237 miles range carries a ticker price of $125,630 or 841,000 yuan.

December 2016: Tesla turns things around in China, tripling its sales in 2016 compared to the year before. Reaches $1 billion dollar in revenue milestone.

June, 2017: Buoyed by surging sales in China despite the pricing disadvantage, Tesla announces that it is in exploratory talks with the Shanghai municipal government to start manufacturing in China and avoid 25% tariff on imported vehicles.

But the talks did not lead to concrete action due to Chinese policy that capped ownership of foreign companies to 50%, forcing them into joint ventures with local partners.

December, 2017: Sales in China continues to surge. Tesla doubles its revenue in 2017 compared to the year before. Reaches $2 billion revenue milestone

April, 2018: “China scraps foreign ownership limits on auto companies making fully electric and plug-in hybrid vehicles in 2018, commercial vehicle makers in 2020 and lift restrictions on the wider passenger vehicle market by 2022.”

May, 2018: Tesla takes the first step to kick start local manufacturing. Tesla’s Hong Kong division registers a wholly owned company with a paid-up capital of $15.8 million, clearing the way for Tesla to handle R&D on electric cars, auto parts, batteries and solar products.

July 9, 2018: China retaliates to US measures imposing tariff on Chinese exports worth $34 billion. Slaps additional 20% duty on imported vehicles. Caught in the crossfire, Tesla is forced to raise Model S and Model X price by 20%.

July 11, 2018: Tesla announces its decision to build its first factory outside United States in Shanghai with a planned capacity of 500,000 years annually.

Other Sources: LA Times , Tesla in 1 page