Tesla To Build 500,000 Cars Per Year in Shanghai China!
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Tesla and Elon Musk have announced some huge news that Tesla will build a factory in Shanghai China! This new Tesla factory could produce 500,000 Tesla Cars per year. It may be more for Tesla Model 3 and Model Y production.
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Holy smoke is the new cycle that never ends, which is Tesla Motors has come out with some unbelievably big news here today. So we’re going to look at this from Tesla’s standpoint, why does Tesla want to make a move like this? Well, it’s going to look at it from China’s perspective.
Why does China want this to happen? Is it good? Is it bad, who’s good for on both sides? So we’re gonna go super in depth. So the news is that Tesla plans China factory that can make 500,000 vehicles a year. Okay, this is monstrous news, 500,000 vehicles a year.
So let’s assume they could do actually 500,000 vehicles per year, let’s assume the average vehicle cost somewhere around $40,000, which is probably on the low side, but we’ll just do that number.
There’ll be around $20 billion of revenue per year that they could produce out of this factory. Okay, if this is a success, and they’re talking about getting this done pretty soon, so we’re gonna look at all the factors behind.
Now, you might think this would move Tesla stock in a massive way today, right? Tesla is gonna have a huge day. No, not really, actually Tesla stock was only up about 1.3% around $4 per share today, up more than the market, certainly, but it wasn’t like if this was some huge day for Tesla stock.
I think part of the reason is Ilan musk actually leaked a little bit of this information back in the shareholder meeting. I don’t I think he kind of did it by accident, but he leaked some of the information at that time.
It wasn’t all the specifics around it. But I think that’s one of the reasons why Tesla did not move up in a big way. Also, I think there’s still a lot of bearish talk out there around Tesla stock so that’s probably another reason why Tesla stock did not move up in a big huge way today.
So let’s look at some of this behind air. Okay, guys. Tesla has reached a preliminary agreement with the Shanghai government to build a factory that would rival production from its lone us assembly plant, as Ilan musk takes the biggest step yet to expand overseas.
The electric car makers playing capacity for the factory is 500,000 vehicles a year. The Shanghai government said in the statement Bloomberg reported earlier that musk Tesla’s chief executive would be in the city for an event with the government on Tuesday.
Youngest publicly held us automaker is looking to expand his capacity and more efficiently to reach global markets. Tesla’s lone car assembly plant is in Fremont, California, and the company has a giant battery factory here in Nevada.
It’s out in sparks Nevada, okay. After moving ahead in China, the world’s largest market for electric vehicles. Tesla has said it plans reveal plans to build a big factory in Europe next, maybe they could announce plans within probably the end of this year, must said in May 2016.
That he expects Tesla to produce 500,000 vehicles in Fremont by 2018. Obviously, the company has fallen under those numbers. So just because, you know, they say oh, we can start doing 500,000 vehicles, maybe eventually one day they can get there.
But just you know, let’s say they get this factory up and running, let’s say in 20, late 2020, or early 2021 doesn’t mean that right away necessarily, they’ll already be hitting 500,000. We know Musk.
You know puts out these big numbers, and they don’t always meet so it could take several years for them to get production to those type of numbers. So don’t get too excited too soon, tense a son and a year ago, he was working with the Shanghai government to explore local manufacturing.
Since then, production in China has become even more crucial. Last week in response to tariffs imposed by the United States. China increased the import duty on us made cars by 40%, prompting Tesla to raise prices.
A plant in China would also reduce shipping costs and could make sourcing components more economical. Tesla has boosted prices of his Model S sedans and Model X crossovers in China buy as much as $30,000.
After Beijing impose the additional duties on American built autos, putting Tesla vehicles beyond the reach of most consumers in the market. Alright guys, that’s that’s a half the move there. Okay.
So Ian moss, he meets here with the Shanghai mayor. And this is a really exciting moment, for two reasons for China, it’s almost obvious on why Tesla would want to make a move like this, it works for Tesla in a huge way.
Right, they get to avoid the import duties, which, you know, they’ve had raised by $30,000 on Model S and Model X, that puts it out of you know, most people’s brackets. I mean, unless you’re super rich, like you can’t afford a Model S or Model X, you know, crossover, like it’s just so unrealistic.
They’re already expensive vehicles, then you raise a price by 30,000 plus dollars, unless you’re, you know, very, very wealthy in China, you cannot afford one of those cars because we’re talking about these are these are bumping up against 150,000 plus dollars at that point in time.
So from from Tesla standpoint, if they want to be a mass market producer of vehicles in China, obviously they they want to go ahead and be over in China so they can avoid those those tariffs.
And then also on top of that the shipping costs and sourcing components and obviously Chinese labor is much cheaper over there. So it makes perfect sense for Tesla why they want to make a move like this right.
But I think the more important thing is kind of why does China want to make a move like this? Well, they’re Two reasons why China would be interested in this one is going to make electric cars more affordable.
We know Tesla has massive demand, a ton of Chinese consumers want Tesla’s I mean, the Tesla’s revenue in China, or like, well over doubled last year, so tons of Chinese consumers want Tesla’s and China has an initiative to expand production of electric cars in their country. Okay, so making it more affordable.
Makes sense. Okay, so definitely, from China’s standpoint, that’s a big part of it. Also, a big Chinese company, one of the darlings of China, one of the biggest Chinese companies out there has an actual ownership stake in Tesla, okay, they bought over 5% of Tesla shares last year, right.
We’re talking about $2 billion, where the Tesla shares this company owns all right. And there’s also some talk about Alibaba may be interested in buying an ownership stake in Tesla, as well as Baidu.
So as of right now, one of China’s darlings Tencent already has a big ownership stake in Tesla. So definitely, the Chinese government is in a position where they there’s many reasons why they want Tesla to succeed.
Other than just you know, trying to mass produce now, there could still be the the worry out there about, you know, could the Chinese government or not directly the Chinese government.
But basically Chinese companies, steal some of the IP and whatnot behind Tesla and go ahead and you know, produce their own cars, that’s still a bigger possibility, when you are over in China and you actually have a factory over there and whatnot.
And everything’s easier to get to your suppliers easy to get to all that type of stuff. That could certainly still be a worry, but I would say it’s less of a worry when I think about it from the perspective of this isn’t a joint venture.
So this is a Tesla factory that’s just for Tesla, okay. It’s not like they’re doing a partnership with somebody. And then when I think about it from the perspective of you know, the darling of China has a huge ownership stake in this company.
And really China is going to want them to succeed because they want to push electric cars more than gasoline cars we know pollution is already insane in China last thing they want is a you know, a billion you know, diesel cars out there a billion gasoline run cars.
They don’t want something that pollutions already bad enough. So it definitely makes sense. I think it’s a great move for for China i think is a great move for Tesla. It should be interesting to see how it all plays out.
I believe Tesla will probably have to you know it sounds like they’re gonna end up going the debt route and basically raising debt to go ahead and build that factory should be much cheaper to build it over there in China than it would be you know, build something on this scale in America.
Let’s put it that way because obviously the workers make much less over in China so it’s gonna be really fun to see how this all plays out. I would love to hear from you guys in that comment section how you think is going to play out you think it’s a great move for Tesla bad move for Tesla great move for China bad move for China.
I would love to hear your guy’s opinion down there in that comment section. As always, links to all my stuff is down there in the description, my Instagram account, Snapchat, all that type of stuff, any premium courses you want to check out all that is linked down there in the description. vegh you for watching. Have a great day.