Tesla is to scale up its production capacity in China by erecting a second production line near the existing plant in Shanghai, which is poised to pull up its total annual output to one million units. This makes the city “the world’s biggest vehicle export hub”, the carmaker confirmed in a letter to the local authorities, thanking them for helping restart production at the Gigafactory after a 22-day suspension during the local lockdown amidst new waves of COVID outbreaks.
It is understood that the assembly line will be used to build Tesla’s Model 3 and Model Y product lines, which are capable of producing 450,000 electric vehicles per year, according to the letter which was first revealed by Reuters on 3 May.
The installation of the Gigafactory has already proven fruitful in the past few years. This is thanks to the growing adoption of EV cars as a result of China’s push for clean energy vehicles as part of the government’s efforts to achieve dual carbon goals: to reach peak carbon emissions by 2030, and to be carbon neutral by 2060. Having broken ground in Lingang, Pudong New Area in Shanghai in 2019, China’s first foreign-funded, end-to-end vehicle production plant soon started functioning in 2020, contributing to more than 140,000 units of Tesla’s whole year output.
The factory’s capacity was ramped up by 235% the following year, resulting in a total of 484,130 deliverables in 2021, accounting for 51.7% of Tesla’s global annual production, of which, over 160,000 units were shipped to more than a dozen overseas markets across the globe. With such a record, Giga Shanghai surpassed the Fremont Factory (another manufacturing plant operated by Tesla in California) in production capacity, as disclosed by Elon Musk, CEO of Tesla last year, showing the significance of the Shanghai subsidiary in driving Tesla’s global growth.
In fact, having had the Gigafactory achieve full capacity by the end of 2020, Tesla had already attempted to expand its base in Shanghai. Earlier in February, the automotive manufacturer was rumoured to be building a new factory in a bid to double its capacity in China and pull off two million cars annually. The latest move once again shows Tesla’s confidence in China’s EV market under its current climate policies and its ambition to consolidate the production base role of its Shanghai factory to leverage the lucrative market more effectively.