Grace Tao, Global Vice President of Tesla, announced via domestic microblogging platform Weibo on August 15 that the localization rate of Tesla China’s supply chain has exceeded 95%, as the firm’s Shanghai Gigafactory has now produced more than 1 million vehicles.
Tao also released a picture taken at the facility’s groundbreaking ceremony held on January 7, 2019. She said that not only Tesla, but also China’s new energy vehicle industry has made great progress in the past three years.
The Shanghai Gigafactory project is China’s first wholly foreign-owned vehicle manufacturing project and Tesla’s first Gigafactory outside the US. In January 2020, Model 3s produced in the Shanghai Gigafactory started delivery.
According to the company’s financial report for the second quarter of 2022, the annual production capacity of the Gigafactory has reached 750,000 units, surpassing Tesla Fremont in California for the first time, becoming the firm’s highest-producing plant at present.
The firm was still promoting its upgrading of Shanghai Gigafactory’s production lines in July. Specifically, the second-stage production line responsible for the production of Model Ys completed upgrades on July 16, and recently, the first-stage production line responsible for the production of Model 3s was successfully reconstructed.
Previously, a YouTube blogger posted videos showing thousands of Tesla vehicles waiting to be shipped to Europe at Shanghai Nangang Terminal. According to the company’s plan, the annual production capacity of the Gigafactory will increase to 1 million vehicles, making it the largest vehicle export hub globally.
With the improvement of production and sales of domestic models and localization rate, the Shanghai Gigafactory has become a key part of Tesla’s global strategy. Last year, the gross profit margin of the firm’s automobile business had reached 29.3%. The company said that “the Model Y is the key to improving its profit margin, as well as the localization of Shanghai Gigafactory.”
This year, the firm’s factories in Texas, US and Berlin, Germany have been put into production successively, sharing delivery tasks with Gigafactories in Shanghai, Nevada and California. However, these two factories could not yet shoulder the burden of delivery. In June 2022, Musk said that due to battery shortage and logistics problems, it was difficult for Gigafactory Berlin and Gigafactory Texas to increase production, and now they were “losing several billions of dollars.”
Capacity problems have affected the firm’s orders. At present, Tesla has closed bookings of its Model 3 long-range version on its official websites in the US and Canada. In the Chinese market, a staff member of the company’s direct-sale store told Chinese media Beijing Business Today that the delivery cycle of vehicles has been more than two months, and that orders for the Model 3 have been arranged until the end of 2022.
According to data from CPCA, Tesla’s wholesale volume in China was 28,000 vehicles in July this year, down 64.2% from the previous month. In addition, the sales volume in China fell to 8,461 vehicles, down 1.9% year-on-year. Simultaneously, its wholesale volume in China has slid to fourth place, with BYD, SAIC-GM-Wuling and Geely as the top three.