Tesla banks on Shanghai Gigafactory 3, its ‘primary vehicle export hub’, to meet global demand
- US carmaker says it has completed the transition of US$2 billion Gigafactory 3 in Shanghai into a plant for deliveries around the world
- Carmakers in China placed enough orders for chips and components before global demand for vehicles rebounded, have a big advantage, analyst says
Tesla is relying on its Shanghai factory to meet global demand for its vehicles, as its other plants grapple with shortages of automotive chips and other car components.
“While we experienced minor interruptions due to supply chain challenges and factory upgrades, production in Shanghai remained strong,” the Palo Alto, California-based company said in its earnings report for the second quarter, which ended on June 30. “Due to strong US demand and global average cost optimisation, we have completed the transition of Gigafactory Shanghai as the primary vehicle export hub.”
Carmakers based in China have avoided the worst of the global shortage of semiconductors by virtue of an early recovery in production and sales after Beijing successfully contained its Covid-19 pandemic. This allowed them to secure supply of car components earlier than their global peers.
China-based manufacturers exported 760,000 vehicles between January and May this year, an increase of 103 per cent from a year ago, according to the China Passenger Car Association (CPCA).
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“An early start gave Chinese carmakers a big advantage, as many of them placed enough orders for chips and components before global demand for vehicles rebounded,” said Peter Chen, an engineer with car components company ZF TRW in Shanghai. “More Chinese-made vehicles will be shipped abroad in the coming months.”
In a call with investors and analysts on Monday, Tesla executives said that volume of production growth for this year will depend on parts availability. Musk said Tesla had “many calls at midnight, 1am, just with suppliers about resolving a lot of the shortages”.
The company aims to grow deliveries by more than 50 per cent, according to Reuters.
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The global electric vehicle (EV) leader posted profit of US$11.96 billion for the second quarter, nearly doubling its earnings of US$6.04 billion a year ago, buoyed by rising sales of inexpensive vehicles.
Its production volume worldwide in the three months ended June jumped 151 per cent to 206,421 cars, while deliveries climbed 121 per cent to 201,304 cars.
The Gigafactory 3 in Shanghai accounted for about 45 per cent of Tesla’s global sales, according to analysts. The factory exported more than 26,000 vehicles in April and May, most of them bound for European and Asian markets, according to the CPCA.
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The carmaker’s delivery numbers for China have not yet been released. It began delivering Model 3 sedans on the mainland in January 2020 and started selling the Model Y sport-utility vehicle at the beginning of this year.