Tesla CEO Elon Musk was in China today to help break ground on a brand new Gigafactory in Shanghai. The factory itself will manufacture cars exclusively for customers in China and will solely be used to manufacture entry level versions of the Model 3 and the Model Y, Tesla’s forthcoming Model 3 crossover.
If all goes according to plan, construction will move at a rapid clip and production at the new factory will begin later this year. And while it remains to be seen what the Gigafactory’s production numbers look like by the end of the year, the factory reportedly has a maximum production capacity of 500,000 units per year. That said, Musk indicated that high-volume production at the factory won’t begin until 2020.
“This will be the most advanced Tesla Gigafactory in the world,” Musk said at the event earlier today, “and arguably one of the most advanced factories in the world of any kind.”
As mentioned above, Tesla’s new Gigafactory in Shanghai will manufacture lower-cost versions of the Model 3 and Model Y. Musk alluded to this on Twitter where he noted that all higher cost versions of the Model S, Model X, Model Y, and Model 3 will continue to be manufactured in the United States.
Notably, with manufacturing operations set to begin in China, consumers there will be able to pick up entry level Model 3 and Model Y units at a nice price cut.
To this point, Xinhuanet reports:
Model 3, for example, which starts at a price of 35,000 dollars in the U.S. market, is sold between 500,000 yuan and 560,000 yuan (around 72,980 and 81,738 dollars) in China. After Tesla starts production of the model in China, the price of the car is expected to start at 400,000 yuan.
Per usual, Tesla’s problems have always been on the supply side as opposed to demand. If the Gigafactory in Shanghai gets up and running as promised, it should prove to be a huge boon for Tesla’s bottom line.
As a final point, Elon Musk last year indicated that Model Y production may begin as early as November 2019.
“We’ve made significant progress on the Model Y,” Musk said last October. “So in fact, I approved the prototype into production recently. It will be 2020 before that’s in volume production. But we made great progress there.”
