“We have completed the transition of Gigafactory Shanghai as the primary vehicles export hub.” Tesla put that line in its Q2 2021 update letter, and it surprised few people who had watched the plant’s output climb.
The company gave two reasons: strong U.S. demand and global average cost optimization. In practice, cars from Shanghai had already been helping the Fremont factory fill European orders. Tesla said European demand “remains well above supply,” and buyers faced long waits. Model Y deliveries in Europe were due to start that quarter.
Giga Berlin was supposed to cover the Model Y in Europe. Production was scheduled for July, but permit processing held it up. Jörg Steinbach, Brandenburg’s economic minister, still hoped the first German-built Model Y would come off the line before the end of the year. Until then, Model Y reservation holders in Europe were more likely to get a car from Shanghai than from Fremont, according to Teslarati.
Built for China, shipping abroad
The plant was first meant to serve only local demand. Electrek reported that Tesla ramped up faster than it expected, reaching an annualized capacity of 450,000 vehicles within two years of starting production. That let it ship cars to other markets and take pressure off Fremont, which could focus on local buyers.
July 2021 showed the shift. Chinese media reported 8,998 vehicles delivered inside China, a steep fall from the month before. But Tesla also exported more than 20,000 cars, for total Shanghai output of 32,968. Of the Model 3s, 16,137 went overseas, and 8,210 Model Ys were exported against 2,397 delivered locally.
Electrek’s advice was to ignore any headlines about “plunging” sales in China. Tesla has long used the first month of a quarter for exports, so ships have time to arrive before quarter’s end, and domestic numbers were expected to improve in August and September.
What the full year showed
In its 2021 results, released in late January 2022, Tesla said Shanghai remained its main export hub. The Global Times reported that the plant delivered 484,130 vehicles in 2021, up 235 percent on the year. More than 160,000 went to ten markets in Europe and Asia, 51.7 percent of Tesla’s global deliveries.
Production of the Model 3 and Model Y kept rising, and Tesla said local production was essential to cutting the cost per vehicle. Parts localization reached 86 percent. In the third quarter of 2021, Shanghai out-built the California factory for the first time.
Chief financial officer Zach Kirkhorn told analysts that the Model Y carries a much higher margin than the Model 3, and that localizing the Shanghai plant helps lift margins further. The company also finished a research and development center in Shanghai with 28 laboratories, its first overseas R&D site dedicated to vehicle development, and a data center for factory production data.
Sources
- Tesla Gigafactory Shanghai is now a primary vehicle export hub
- Tesla says Shanghai factory becomes companyâs major âexport hubâ
- Tesla turns Gigafactory Shanghai into its new 'export hub,' and July numbers are showing it
Sources
- Tesla Gigafactory Shanghai is now a primary vehicle export hub
- Tesla says Shanghai factory becomes company’s major ‘export hub’
