Tesla plans for a new plant in Shanghai

• Tesla plans to build a new plant in Shanghai, according to reports. 
• The plant in Shanghai is expected to produce up to million cars per year once operational.
• The Shanghai plant would give Tesla  to be on par with Chinese EV brands 

Despite Tesla losing out to Chinese electric vehicles (EV) in sales figures last year, Elon Musk is not giving up on China yet. The EV carmaker has always acknowledged China as one of its key markets for the growth and expansion of its Tesla models.

But competition in China from cheaper and local EV carmakers is giving Tesla a run for their money. In fact, the China Passenger Car Association reported that budget electric car Hongguang Mini was the best-selling EV in China in 2021.

Another local brand, BYD dominated the top vehicles sold in the new energy vehicle category, which included battery-powered and hybrid cars. While several new local EV carmakers also reported increased sales, more than 150,000 Tesla Model 3 were sold in China in 2021.

With the demand for EVs growing in China and the rest of the world, reports show that Tesla is planning to build a new plant in Shanghai as soon as March 2022. According to a Reuters report, Tesla plans to expand parts production at its Shanghai factory to meet the growing demand for exports.

Citing a document filed with the city government, the report also said that Tesla will add production workshops, increase the number of workers and lengthen the time equipment is operational the document. Tesla did not respond to a request for comment.

The plant in Shanghai is expected to produce up to million cars per year once operational. Tesla’s current Shanghai factory has the capacity to produce a combined 450,000 Model 3 and Model Y vehicles a year.

Tesla’s Shanghai factory has become a crucial export hub to markets such as Germany and Japan. In 2021, Tesla’s China-made cars accounted for around half of the 936,000 vehicles it delivered globally. Elon Musk also said in October 2021 that Shanghai had surpassed its Fremont, California factory in production.

Should the factory be approved, Tesla would have the capacity to be on par with Chinese EV brands as well. Apart from Tesla, Volkswagen also announced plans to increase its production in China, with their CEO relocating to Beijing to oversee operations.

At the same time, Tesla’s Shanghai expansion plans could be a potential blow to India. Musk had earlier shown interest to bring the EV to the subcontinent and has even received invites from several Indian states to set up a production plant. However, regulatory requirements have not been favorable for Musk as Tesla continues to have talks with the government.

Interestingly, while there has not been any official word from Tesla on the new plant, the Securities and Exchange Commission in the US is investigating whether recent stock sales by Musk and his brother Kimbal Musk, who sits on Tesla’s board of directors, violated insider trading rules.

Tesla is also facing problems in Germany as environmental groups are challenging a license granted to its water supplier. The German plant was supposed to be up and running six months ago.

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