Tesla plans to design and assemble new car models in Shanghai and Berlin, giving the offshore operational centres outside its Palo Alto, California head office more clout to offer electric cars that track more closely to local consumer preferences.
Chief executive Elon Musk confirmed in a response to a tweet about the factories that Tesla was preparing to build two new and differing car models at the facilities. “Both will do original cars,” he said on Monday.
The statement portends heated competition in China, the world’s biggest new-energy vehicle market, after a number of Chinese rival producers shored up their capital through stock offerings to fund new model development and expand production lines to catch up with the global leader. Europe, with a strong consumer preference for energy efficient vehicles, is also a key market for Tesla.
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Tesla rolled out Model 3 sedans in January from its US$2 billion Gigafactory 3 facility in Lingang outside Shanghai. In the short span of time, the locally built model has become a top-selling car in the mainland market by outselling its nearest rival BYD by three to one.
The California-based carmaker cut the price of Model 3 in April with a standard-range battery pack to 271,550 yuan (US$39,817) after subsidies, from 299,050 yuan. The cut fuelled demand from wealthy Chinese fans with a penchant for luxurious cars to boost their social status.
They helped propel the delivery of Model 3 to 14,954 units, giving Tesla a 23 per cent share of the pure electric car segment, according to the China Passenger Car Association (CPCA). BYD, one of the oldest producers based in Shenzhen, came a distant second, with the sale of 4,106 units of Qin EV3 model.
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Yale Zhang, managing director of industry researcher Automotive Foresight, said local brands would need to slash their cars’ prices before taking on Tesla. As the most established NEV brand worldwide with the most mature technology, it enjoys stronger consumer awareness, he added.
At present, Model 3 is the only Tesla model that is assembled at the Gigafactory 3 and sold on the mainland. Tesla has started making Model Y test vehicles there, which is expected to be delivered to local customers from early next year.
Automotive industry officials are also hoping the US electric vehicle maker to create a local supply chain on the mainland to cut production costs in the industry.
Chinese rivals including Nio, Xpeng and Li Auto are offering models with longer driving ranges and sophisticated electronic gadgetry to compete against Model 3, but they have yet to mount a real challenge to the US rival.
Xpeng’s P7 sedan sells at 229,900 yuan and Li Auto’s Li One SUV sports a price tag of 328,000 yuan. Nio’s ES6 sports-utility vehicle starts at 343,600 yuan after subsidies.
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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