Tesla delivers first China-made Model 3 cars from new plant

<i>Image: Scott Olson / AFP</i>
<i>Image: Scott Olson / AFP</i>
Scott Olson

Tesla has started delivering Model 3 electric cars built at its Shanghai factory, just under a year since it began work on the $2bn plant, setting a record for global automakers in China, and said it would ramp up deliveries from next month.

The US-based electric vehicle maker marked the start with an event on Monday where 15 Tesla employees received cars they had purchased, one of whom took the opportunity to propose to his girlfriend after receiving his new set of wheels. The China-made Model 3 sedans are priced ¥355 800 ($50 975) before subsidies.

Up and running

In comparison, its imported Model 3 vehicles start at ¥439 000 ($62 870) for the longer-range version and the standard range plus model costs less than $40 000 in the US.

READ | Bring Tesla to SA? 'Would love to but import duties are extremely high' says Elon Musk

The Shanghai plant, up and running in 357 days and the company's first outside the US, is part of Tesla's plans to bolster its presence in the world's biggest car market and minimise the impact of the US-China trade war.

The automaker, which previously imported all the cars it sold in China, had said it wanted to start deliveries from the Shanghai plant before the Lunar New Year beginning on 25 January.

"From now onwards, China-made Model 3 vehicles will start running on China's large streets and small lanes," Tesla Vice President Tao Lin said at the delivery ceremony, which was attended by employees and Shanghai government officials.

Opening up the market

China general manager for the Silicon Valley carmaker, Wang Hao, said Tesla plans to ramp up Model 3 deliveries in January.

The Chinese government has been supportive of the factory, the first wholly foreign-owned car plant and a reflection of Beijing's broader shift to open up its auto market.

Elon Musk talking

                                                            Image: Joshua LOTT / GETTY IMAGES NORTH AMERICA / AFP

The Model 3 will compete with electric cars from local contenders such as NIO Inc. and Xpeng Motors, as well as global manufacturers including BMW AG and Daimler AG.

While China-built cars are yet to be delivered to customers outside the company, Monday's milestone caps several months of wins for Chief Executive Officer Elon Musk. 

The latest came on Friday, when the locally built car was included on a list of vehicles qualifying for an exemption from a 10% purchase tax in China.

The Shanghai Gigafactory broke ground at the start of this year. Originally just a muddy plot about a 90-minute drive away from Shanghai's city centre, it is now a crucial test of Musk's bid to keep his carmaker profitable as he bets big on Chinese appetite for electric cars.

                                                                    Image: Scott Olson / AFP

With Tesla's volatile stock price and strained finances, investors will be watching closely how the ramp-up unfolds. The multibillion-dollar investment will be a determining factor in whether Tesla will be able to take on local competitors and fend off challenges by the likes of Mercedes-Benz, BMW and Audi.

Although Musk has said he has never seen a factory built so quickly, the first delivery came only a day before the end of 2019.

Back in April, the CEO predicted Tesla would make at least 1,000 cars a week in Shanghai by the end of the year - a volume the company's original factory in California spent months trying to hit. He has also said a weekly rate of 3 000 is a target at some point.

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