Much is riding on Tesla as Shanghai’s authorities pull out all stops to resume Model 3 production at Lingang factory

On a weekday afternoon at Swire Properties’ Taikoo Hui shopping centre in Shanghai, a dozen customers browsed at Tesla’s showroom in an otherwise deserted neighbourhood, as millions of residents remained homebound during the city’s effort to contain a coronavirus outbreak.

The focus of this rare scene was a Model 3 electric car, put together at Tesla’s spanking new US$2 billion Gigafactory 3 in nearby Lingang district, carrying a price tag of 299,050 yuan (US$43,000) after subsidies. Three months earlier, a fully imported Model 3 would have been priced at 370,000 yuan.

“Much hope is pinned on Tesla’s Model 3 to help the market regain its upwards momentum,” said Qian Kang, owner of a Zhejiang-based company that makes car components. “The market sentiment is so weak that we are looking for a star to stand out and lead the market rebound.”

Sales plummeted 92 per cent in the first two weeks of February, with just 4,909 vehicles finding buyers, according to data by the China Passenger Car Association, as the coronavirus lockdown kept buyers away from showrooms across the country. With job and business prospects weighed down by the trade war, many consumers had also been reluctant to spend on big-ticket purchases. Vehicle sales fell 8.2 per cent last year to 25.8 million units, while production shrank 7.5 per cent to 25.7 million units.

The municipal government of Shanghai is pulling out all stops to ensure success at Tesla’s Gigafactory, the US carmaker’s first overseas plant, and the crown jewel of Lingang as the local authorities woo global investors to set up in the free-trade zone. Housing would be offered to Tesla’s assembly workers, installed with infrared thermal sensors to detect any fevers. Arrangements are also being made to accelerate the delivery of components from suppliers to keep production on schedule at the factory.