Elon Musk, the CEO and founder of Tesla, has had a great start to 2019. Elon Musk, the billionaire entrepreneur, has dominated the spotlight since he spoke in Shanghai at the launch of his new Tesla factory called Tesla Gigafactory 3. The factory, which is under construction, will begin producing Tesla Model 3 and Tesla Model Y electric cars by the end of 2019.
Affordable cars for China
In July 2018, the Shanghai Regional Government approved the agreement for the construction of the production facility. A long-term land lease was signed in October 2018 for 210 acres. Construction of the factory started in December, just three months after Tesla signed a long-term land lease in Lingang, Shanghai. The site was equipped with secure fencing and offices.
Shanghai Municipal Government has granted a construction permit authorizing the work to start after 29 December 2018 for 180 days. China Construction Third Engineering Bureau Co. Ltd., part of China State Construction Engineering (a large state-owned construction company), is the project contractor.
Musk tweeted: “We are aiming to finish the initial construction by summer, begin Model 3 production at the end of this year and achieve high volume production in 2019.” Musk tweeted that Shanghai Giga’s Model 3/Y production will serve the greater China region.
Tesla’s factory in Shanghai will be its first outside of the US. Musk tweeted before the event that “Shanghai Giga production is only for greater China and not North America.” Affordable cars have to be produced on the same continent that customers.
The new plant is expected to produce cars at affordable prices for Chinese consumers.
Chinese Market
Tesla will find it difficult to crack the Chinese automotive market. China is the largest car market in the world. It’s home to big players such as AIC, FAW Group, GAC Group Dongfeng Geely Changan, etc. Bain & Company’s study shows that China is the largest mobility market in the world. The convergence of automotive, technology, and ecommerce is happening in unexpected, new ways. Chinese consumers are more willing than most others to adopt digital technology. They are also open to new options, which are being made available at an unprecedented rate.
As the mobility ecosystem grows, it is clear that one message is emerging. To beat rivals, you will need to create the right alliances in order to build the necessary capabilities and manage the inherent risks of a new dynamic industry. The report says that no company can win in the largest mobility market in the world.
It will be fascinating to see whether Musk’s Tesla has a successful debut in China’s booming auto market.
