American EV maker Tesla recently celebrated the production of its two millionth battery electric car at Gigafactory 3 in Shanghai. Tesla began manufacturing EVs at the Shanghai plant in 2019, and the company uses the facility to produce the Model 3 as well as the best-selling Model Y.
With a reported production capacity of more than 750,000 units per year, the Shanghai facility quickly became one of the largest electric vehicle production facilities on the globe. Tesla started building Gigafactory 3 in January 2019, and after a faster-than-usual construction period, the company began producing the Model 3 at the facility in late 2019; the Model Y began production in late 2020. The facility produced its millionth electric car in August 2022, only 33 months after production started, and reached two million units 13 months later.
The Texas-based automaker has cumulatively produced around five million EV units, making the Chinese factory responsible for two-fifths of all Tesla’s production. Although Tesla puts the plant’s production capacity at slightly more than 750,000 units annually, data shows that the plant has produced and sold more than 935,000 units in the past year.
Gigafactory Shanghai is arguably the largest EV production site globally and was the first time the Chinese government allowed a foreign automaker to set up camp in the country independently rather than via a joint venture with the government. It was also Tesla’s first overseas gigafactory, reaching 484,130 vehicles produced in 2021 and making up 51.7% of Tesla’s production that year. Experts believe the facility has an installed annual manufacturing capacity of more than a million units.
China’s massive population represents the world’s largest electric vehicle market and has attracted plenty of local and foreign automakers. The market has become incredibly competitive over the past few years as local automakers such as BYD have increasingly eaten into Tesla’s market share, resulting in an ongoing discount war among top EV makers in China.
The Chinese production facility first started manufacturing electric cars for the local market but soon became Tesla’s foremost export hub. The facility now supplies Tesla EVs to surrounding Asian countries as well as Europe and Canada. By the end of July, EV sales from the facility reached 325,000 units within the country while exports surpassed 215,000 units.
While experts believe that exports from Gigafactory 3 in Shanghai will match local sales in the future, it is still unclear whether the factory will produce new and affordable electric cars or continue producing the Model 3 and Model Y.
Other startups such as ElectraMeccanica Vehicles Corp. Ltd. (NASDAQ: SOLO) are also working to ramp up their EV production so that the different market segments that need these vehicles can have their needs met.
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