SHANGHAI, Mar 1 (SMM) – It is reported that Tesla may build a second factory in China in Lingang area, Shanghai, and the new factory is expected to start construction as soon as next month. Tesla’s annual production capacity in China may increase to 2 million vehicles after the completion of the new factory. However, Tesla and relevant departments in Shanghai have not yet responded to the news.
Why to build a second factory?
Insufficient production capacity is a problem that has always plagued Tesla. Consumers need to wait at least 14-16 weeks to buy a Tesla, because the current production capacity of Tesla's Shanghai factory is capped at 500,000 vehicles, and the sales in January this year has reached 59,845 vehicles. Secondly, compared with Europe, China's COVID-19 control measures have provided a safe environment for production. Therefore, building a second factory in China is a wise choice.
Why to choose Shanghai?
Transportation: Compared with the digital 3c products, the new energy vehicles are larger in size. The cost of water transport is 1/2 of railway transport, 1/5 of the highway, and 1/20 of the aviation. As such, shipping by sea is more cost effective. Tesla's second factory also supply vehicles to the Japanese and European markets, for which shipping is particularly important. Shanghai has an excellent port system, which can radiate the Yangtze River Economic Belt, and can connect the whole world.
Technology: There are many domestic colleges and universities in the Yangtze River Delta, and Shanghai is a gathering place for high-tech talents across the country, providing a talent pool for Tesla's development.
Economy: Tesla need to choose a city with a high starting point, fast development, and high technology, which can meed its production demand. As the largest commodity distribution centre in China, Shanghai meets 90% of Tesla's needs for parts production. Shanghai has strong advantages in terms of transportation, land construction, and development speed.