Tesla Says China Output May Hit 2,000 a Week This Year
(Bloomberg) -- Elon Musk said Tesla Inc.’s production in China, the world’s largest electric-car market, could reach a rate of 2,000 vehicles a week by the end of the year.
“It looks like we will reach volume production at the end of this year with at least more than 1,000 cars a week, maybe 2,000,” Musk said on an earnings conference call on Wednesday. “If it’s not then, it will be shortly thereafter.”
Musk was responding to an analyst’s question about whether he was still confident in reaching a 3,000-car-a-week target. In January, Tesla’s chief executive officer said he was initially aiming for output of 3,000 Model 3 cars a week in Shanghai, though he didn’t specify when that target would be reached. Tesla’s first Chinese factory, which is under construction, will help the company to avoid the current 15 percent tariff on imported cars from the U.S., making its pricing more competitive against local brands.
The need for Tesla to expand beyond its home market of the U.S. was highlighted by the earnings it reported Wednesday, with first-quarter results missing analysts’ projections. The halving of a federal tax incentive for Tesla purchases starting in January dragged on U.S. demand in the quarter, and Tesla struggled to offset that drop by starting deliveries of the Model 3 in Europe and China.
Shares of Tesla ended the U.S. post-market trading session little changed. The stock has lost 22 percent this year.
China has been supporting the construction of Tesla’s Shanghai factory, with the company securing up to $521 million in China bank loans to finance the plant. A Shanghai government official said in March that he expected the factory’s assembly shop to complete construction in May.
“We have 99 percent of things in good shape,” Musk said. “But if 1 percent is missing you still can’t make a car.”
Musk also said Tesla is working to have multiple battery-cell suppliers for the Shanghai factory. Tesla, which has thus far relied on Panasonic Corp. batteries, is in talks with top Chinese battery producer Contemporary Amperex Technology Co. Ltd. about supplying cells for the Model 3 cars it will assemble in Shanghai, people familiar with the matter have said.
Earlier this week, a video of a Tesla sedan catching fire in a Shanghai garage went viral in China. A Shanghai fire department said Wednesday it is yet to determine the cause for the fire, with an investigation continuing.
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