Tesla’s next Gigafactory is about to take shape. On Sunday, CEO Elon Musk revealed via Twitter that the company plans to break ground soon for construction of a new electric vehicle factory in Shanghai. Government filings show that the site will produce 250,000 vehicles per year for the Chinese market, including the upcoming Model Y sports utility vehicle.
It’s a big step forward for Tesla’s efforts in China, which historically languished in the face of cheaper local competition. A strategy rethink enabled the firm to turn its fortunes around, tripling its revenue from China year-over-year to reach $1 billion in 2016. The 210-acre site in Shanghai, announced in July, will be the company’s first factory in China. It’s expected to produce the entry-level Model 3 sedan, the company’s cheapest electric vehicle released in July 2017 with a starting price of $35,000, plus the Model Y. Musk has released few details about the latter vehicle, but it’s expected to receive a full unveiling in March 2019.
The Model Y is set to act as a cheaper version of the Model X sports utility vehicle, akin to how the Model 3 is a cheaper version of the Model S sedan. Pricing and specifications have yet to be confirmed, but Tesla has released teaser images of the new vehicle ahead of its unveiling. Musk first outlined the vehicle in the company’s second master plan, alongside the Model 3 and a pickup truck, as the vehicle that will bring Tesla to a mass market.
While Model 3 production has ramped up successfully from a slow start, reaching a rate of 5,000 cars per week by the end of June 2018 to fulfil a backlog of nearly 500,000 cars at the start of production, the Model Y will face new challenges. Musk has spoken before about his aims to make the new car easier to manufacture based on lessons from the Model 3, however, describing it as “a manufacturing revolution” in May’s earnings call.
Tesla claimed in June that it expects the Shanghai factory to take two years to complete, plus a further two to three years before it’s producing 500,000 cars per year. That means Teslas could start rolling off the new production line as early as 2020.
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