Tesla ‘on track’ to begin Model 3 production at China factory by end of year

Tesla stated Wednesday that Model 3 production is on track to start in its Shanghai factory by the end of the season — a critical milestone for the automaker if it hopes to continue to raise sales and avoid the high cost of transport and tariffs.

The Gigfactory Shanghai “continues to take shape,” Tesla composed in its quarterly revenue letter to shareholders. Machinery was transferred for the very first phase of production during the quarter in preparation.

“Depending on the time of the Gigafactory Shanghai ramp, we are still target production of vehicles in the period ending June 30, 2020,” the company wrote.

That is a more rosy outlook when it stated that target didn ’ t appear probable in relation to the company supplied just 3 months back.  At the moment, Tesla noted that it was “targeting” as many as 500,000 vehicles worldwide based on reaching volume production early in the fourth quarter. “However, according to what we know now, being able to produce over 500,000 vehicles worldwide in the 12-month period ending June 30, 2020 does appear very probable,” the company wrote in its first-quarter revenue letter published April 24.

The production line in the factory in China is going to have a capacity of 150,000 units annually and are a simplified, more cost-effective variant of the Model 3 lineup in its Fremont, Calif. factory. Tesla previously said this second-generation Model 3 lineup will be at least 50% cheaper per unit of capacity compared to its Model 3-related lines in Fremont and in its Gigafactory in Sparks, Nev..

Tesla is relying on sales in China to continue its sales momentum.

“Given Chinese clients bought well over a half million premium sedans this past year, this market poses a powerful long-term prospect for Tesla,” the company said Wednesday.

Producing the Model 3 would lower the expenses of transport and tariffs. That doesn’t eliminate every obstacle there.

Automotive sales in China have taken a hit over the past year. The earliest signals of a recovery were reported earlier this month when preliminary figures from the China Passenger Car Association revealed vehicle sales rose 4.9percent to 1.8 million units in June from a year before. That’s first growth since May 2018 for rsquo & your planet ;s market.

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