5 things to know about Tesla’s China plans

All Teslas are currently built in California. A new factory in China will be operational in three years according to Tesla CEO Elon Musk

16 July, 2018

As Indians eagerly await Tesla vehicles to hit the roads, Elon Musk, the CEO of the company, could now well be on his way to India.

Incidentally, Musk about a year ago said that Model 3 production should reach 10,000 units per week before the end of 2018.

In November, Mr Musk said Tesla was about three years away from starting production in the world's biggest auto market. But Tesla faces growing competition from Chinese and foreign brands that are developing dozens of electric models.

Both GM and Tesla have been lobbying Congress since a year ago, hoping to win changes to tax law that would allow them to continue to collect the tax credit, but they have been unsuccessful to date. China retaliated by imposing an nearly identical tariff, meaning Chinese consumers who want to own a Tesla will have to spend an additional $30,000. Producing cars in China would eliminate risks from tariffs and other import controls.

He also told the SEC that some of the batteries Tesla used in its vehicles contained "dangerous puncture holes" due to manufacturing defects, and that Tesla "lowered vehicle specifications" to allow battery cells to be packed more tightly together.

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A make-or-break question for a startup in a capital-hungry industry. And in early may, Tesla reported a loss for the fifth quarter in a row. The company's $5 billion Nevada battery factory was financed with help from a $1.6 billion investment by battery maker Panasonic Corp.

Tesla says an agreement signed recently with a Shanghai city government agency calls for construction to start in the near future.

Musk said the plant, which has been in the works for a year, would eventually have an annual production capacity of 500,000 cars, and he hoped it would be "completed very soon".

The South African-born Tesla boss had already confirmed that the Performance variant will use a powertrain layout similar to the dual-motor Model 3, suggesting it will have a motor to drive each axle. That gives it plenty of room to grow in a Chinese market that still is expanding, while US and European demand is flat. That might mean it earns credits it can sell to automakers that fail to meet their quotas. BAIC Group's EC line, starting at $22,000, sold 13,000 units in December, almost matching Tesla's 2017 total. Automakers are investing heavily to develop models to appeal to local customers.

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