The possible location of Tesla’s second factory in China has always been a hot topic. Reports surfaced recently that the American electric vehicle (EV) firm would establish another production facility in the northeastern Chinese city of Shenyang – this has been denied by Tesla.
The news originated from an update released by the General Office of the Liaoning Provincial People’s Government via its official WeChat account on February 12. The article in question mainly introduced the “Five Grasps” strategy for revitalizing and developing Dadong District in the city of Shenyang.
In the fifth point, the Liaoning Provincial Government states: “The urban renewal of the Wenguan Area will augment the industrial development space and lay the foundation for the settlement of major new energy vehicle projects such as Tesla.” This terse comment triggered many press reports that Tesla’s second factory in China may be located in Shenyang. However, the publishers assert that the article does not actually say Tesla will definitely be settled in Shenyang, but rather that Shenyang is planning to lay the foundation for the project’s potential arrival.
At the end of 2021, Tesla CEO Elon Musk announced plans to build Tesla’s second factory in Asia, sparking global speculation. Researchers think Tesla will choose China as the site, particularly after its failure in India, and due to higher industrial chain and labor costs in Japan and South Korea.
Tesla has repeatedly responded to rumors about the location of a new manufacturing facility. In November, 2021, Tao Lin, Vice President of Tesla, asserted that all news about the location of Tesla’s second factory on the internet is not true.
In 2021, Tesla’s revenue in the Chinese market reached $13.844 billion, a year-on-year increase of 107.8%. China is now Tesla’s most important overseas market. The significant increase in revenue mainly comes from higher production capacity and higher delivery of the firm’s Shanghai Gigafactory.
Neither of Tesla’s Gigafactories in Berlin or Texas have been put into production yet, meaning the Shanghai facility remains the pillar of Tesla’s overseas production. Yet, the Shanghai Gigafactory only has a designed production capacity of 500,000 vehicles, and its current production capacity has already reached 450,000 vehicles per year. Even in full capacity, it is hard for the Shanghai Gigafactory alone to meet Tesla’s growing sales demand. To satisfy the rapidly growing need, Tesla’s production capacity is in short supply, and therefore, it is now a top priority for Tesla to expand production capacity.