December 30 (UPI) — Tesla delivered its first cars in China on Monday, a milestone for Elon Musk’s company, which is seeking to accelerate expansion in the world’s largest electric car market. The company delivered the first 15 Model 3 sedans assembled at Tesla’s multibillion-dollar New Shanghai plant on Monday to its employees.
The plant is also the company’s first outside the United States. More employees will receive vehicles in the coming days and will deliver them to customers from January, company officials said at the delivery ceremony.
A Tesla Model 3 slowly drives off the production line in Shanghai on December 30.
China is not only the largest market for traditional cars, but also the largest market for new energy vehicles. Tesla CEO Elon Musk hopes its Chinese plant will help the company further expand its recent momentum in China. The Model 3 will compete with local rivals such as Weiwei and Xiaopeng, as well as electric cars from global manufacturers such as BMW and Daimler.
Wang Wei, General Manager of Tesla China, said at the plant that demand for the local model 3 was very good and that Tesla was confident that it would sell all the vehicles it produced at the plant. He said the company’s goal was to beat all internal combustion engine cars.
Song Gang, the plant’s manufacturing director, said the plant currently produces more than 1,000 vehicles a week and plans to double production next year. That means the plant has already met Musk’s April expectations.
The company spent months trying to produce 1,000 vehicles a week at its California plant. Musk also said he would aim to get the Shanghai plant to produce 3,000 vehicles a week in the future.
Monday’s milestone is another positive event for Musk, though it has yet to deliver Chinese-made cars to customers outside the company. It follows on Friday when China added the domestic Model 3 to its list of new energy vehicle models exempt from the 10% purchase tax.
Tesla’s shares have since risen sharply after reporting an unexpected profit on October 23rd, more than double the mid-year low of $178.93 hit in June. The stock was essentially flat at $430.38 on Friday.
On Monday, about 200 people, including media and Tesla employees, attended the delivery ceremony at the plant. When Zhu Xiaoxuan, the company’s head of Greater China, delivered the first vehicles, there was applause and cheers.
Tesla’s Shanghai super plant started construction earlier this year. The factory was originally located just a 90-minute drive from the city centre. Musk’s demand for electric cars in the Chinese market is betting heavily on Tesla to keep it profitable, and the success or failure of the Shanghai plant will be a big test.
Investors will be watching Tesla’s move closely at a time when share prices are volatile and their financial position is tight. Whether Tesla can challenge local competitors and meet the challenges of Mercedes-Benz, BMW and Audi, the multibillion-dollar investment in the Shanghai plant will be a decisive factor.
As part of the company’s expansion in China, Tesla plans to add dozens of points to China next year to showcase its vehicles and provide charging and other services, Said Xue, china’s after-sales director.
A Tesla Model 3 pulls out of a factory gate in Shanghai on December 30.
Tesla said in October that the Chinese-made Model 3 was priced at about $50,000. In addition to the tax-free purchase tax announced on Friday, Chinese-made Model 3 models will start this month to qualify for up to Rmb25,000 ($3,600) per vehicle in government subsidies.
Tesla is considering cutting prices by 20 percent or more next year on model 3 made in China because it plans to cut costs by using more local components, according to people familiar with the matter.
The delivery of the first cars will also provide clues as to whether Tesla can truly globalize. The company also plans to build further plants in Germany to meet the emerging demand for electric vehicles in Europe.