Tesla to bring portion of Model 3 production to China next year



Tesla, that reported its annual earnings in two decades Wednesday, is looking to expand its earnings streak by bringing its own new Model 3 to customers beyond North America. As part of the plan involves accelerating its production strategies in China.

Tesla saw its revenue skyrocket to $6.8 billion from the third quarter (plus also a $312 million gain ) thanks to sales of its Model 3 car, despite production bottlenecks and much more recent issues with delivery logistics. The company was able to achieve that profitability landmark just through sales in the U.S. and Canada. That leaves two other enormous markets around the table. Cue Europe and China.

Tesla said Wednesday that it will start to take orders to its Model 3 in Europe and China prior to the end of 2018. Tesla said it will start deliveries of the Model 3 to Europe early next year.

“The midsize premium automobile market in Europe is more than twice as big as the exact same segment from the U.S.,” Tesla said in its own shareholder letter published Wednesday. “This is the reason why we are excited to deliver Model 3 to Europe early next year. ”

Notably, the company is further accelerating its deadline for China and said it will bring parts of Model 3 production to the nation next year.

“We are planning to deliver parts of Model 3 production to China through 2019 and to progressively raise the degree of localization through local sourcing and production,” Tesla said in its earnings report. “Production in China will be designated only for local customers. ”

Tesla said earlier this month it plans for as fast build from a mill in China. But there’s something fresh here. The expression “parts of Model 3 generation ” is the important phrase. This could be referring to a term employed in the production world called a complete knock down. CKD is essentially a kit of non-assembled parts of a product, like state a Model 3. It’s a technique used to prevent tariffs when shipping to foreign nations.

Tesla has plans to construct a mill in Shanghai, however, construction hasn’t even started yet.

The organization procured in October rights to about 210 acres of land in Lingang, Shanghai, the site of the electrical automaker’s planned mill and its first outside of the U.S.

Tesla warned in its own production and delivery report in early October the tariffs, along with the cost of transport its own vehicles via ocean carrier and the lack of access to money advances available to locally produced electric cars, has placed the company at a disadvantage in China. Tesla reiterated those cost constraints in its own third-quarter earnings report.

Tesla achieved a bargain  in July with the Shanghai government to construct a mill that it says will be capable of generating 500,000 electric vehicles per year. Once construction starts, it will take roughly two decades before Tesla can create vehicles. It’ll be another “2 to three years before the mill is completely awakened to produce around 500,000 vehicles annually for Chinese customers,” a Tesla spokesman said at the moment.

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