Tesla Model 3 supply chain localization goal achieved in China: report



Tesla Gigafactory Shanghai has reached its localization supply goal in China, reported local media following an exclusive meeting with Vice President of External Affairs Grace Tao. Now Tesla has fulfilled its neighborhood supply goal, the purchase price of this China-made Model 3 can surpass more. 

“Tesla’s localization supply goal has been basically achieved, and it’s not likely that costs will continue to be reduced later on,” Tao told China Business News

The domestically-manufactured Model 3’s cost has been decreased a total of five occasions between October 2019 to October 2020. The Model 3 SR Plus has gone from 355,800 yuan ($54,480) into 249,900 yuan ($38,264). 

We basically reached our localization goal, chance of future price cuts isn’t high, #China media citing Tesla. #EV price is related to price, so if components or materials price rises in future, it isn’t completely impossible that Tesla EV costs increases, company added. pic.twitter.com/srhF25mFbG

— Moneyball (@DKurac) December 30, 2020

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The neighborhood news outlet noted the price decreases have generated some dissatisfaction with several car buyers who purchased their vehicles between the price updates. Now Giga Shanghai has established a neighborhood supply chain, Giga Shanghai’s Model 3 may surpass in price. 

But, Tao remarked the Model 3’s price may still vary from time to time. She clarified that the purchase price of both Giga Shanghai’s Model 3 has been closely tied into the expenses of the raw materials it can take to manufacturer Tesla’s sedan. 

“If the purchase price of raw materials or components rises later on, Tesla’s electrical vehicles aren’t without the prospect of price increases,” stated Tesla China’s VP of External Affairs. 

Elon Musk talked somewhat about the ramifications of localizing Shanghai’s supply chain during TSLA’s Q2 2020 earnings call

“Yes. I mean, the Shanghai mill is a pretty major mill, and it’s ongoing to do more and more internally. But it’s also — the thing that’s really helping is like that there were formerly a slew of components that were produced in different parts of earth that were being shipped to Shanghai from every portion of earth, and just independently sourcing those components makes a huge difference to the price of the car. ” 

“And I mean, the ratio of local sourcing has literally been rising like 5 percent to 10% a month in 40 — it had been like 40% in the start this year, something like that. It will be just like 80% from the end of this calendar year, maybe more,” Musk said.

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