Tesla Model S

Tesla approved to build cars in China, revving up race against Porsche

Image credit: Melpomenem | Dreamstime.com

Tesla has been given permission by the Chinese government to start building its cars in China, according to a new list of approved companies published by China's Ministry of Industry and Information Technology.

Reuters reported that Tesla is now free to begin building electric cars at its Shanghai Gigafactory, and that the company has already declared that it hopes to get started before the end of this year. The Gigafactory is costing Tesla an estimated $2bn.

The Shanghai facility will be Tesla’s first full-scale manufacturing plant outside of the US. It does maintain an 18,900 square-metre “final assembly and distribution point” in Tilburg, Holland, where electric vehicles sold in Europe are prepared for sale. Tesla already has 24 branded stores in China: the world's largest market for electric vehicles.

In September, Tesla CEO Elon Musk visited China to secure a tax break for the company. During his visit, he proclaimed that Tesla’s China plant will build 3,000 Model 3 electric vehicles every week once production begins.

The Ministry of Industry and Information Technology of the People's Republic of China was established in 2008 and says that one of its main responsibilities is to “determine China's industrial planning, policies and standards.”

Earlier in the year, in a letter sent to shareholders in July, Tesla stated: “Gigafactory Shanghai continues to take shape, and in Q2 we started to move machinery into the facility for the first phase of production there. This will be a simplified, more cost-effective version of our Model 3 line with capacity of 150,000 units per year – the second generation of the Model 3 production process.”

“Just like in the US, the Model 3 base price of RMB 328,000 is consistent with its gas-powered competitors, even before gas savings and incentives. Given Chinese customers bought well over a half million mid-sized premium sedans last year, this market poses a strong long-term opportunity for Tesla.”

“We are looking forward to starting production in China by the end of this year. Depending on the timing of the Gigafactory Shanghai ramp, we continue to target production of over 500,000 vehicles globally in the 12-month period ending June 30, 2020.”

Tesla's Chinese fillip comes at a crucial time for the struggling automotive company, already facing its own severe financial challenges and soon to be facing competition in the luxury EV market. The imminent launch of Porsche's first-ever all-electric car, the Taycan, is seen by many as the most significant threat to Tesla's business. The cachet of the legendary German marque is likely to prove highly seductive to buyers at the luxury end of the market. High-end electric vehicles are also due soon from Audi, Mercedes-Benz, BMW and Volkswagen.

In a bid to establish the credentials of its Model S sedan, Tesla recently claimed a Porsche-beating lap time at the famously exacting Nuerburgring racetrack in Germany. German car magazine Auto Motor und Sport said a Tesla was seen recording an unofficial time of 7 minutes and 23 seconds, which would beat the official lap time previously set by Porsche’s Taycan, at 7 minutes and 42 seconds.

However, Tesla’s approach has been called into question. “The car was heavily modified,” said Stefan Baldauf, who photographs prototype vehicles being tested on the circuit. “Aside from a roll cage and the driver’s seat, the interior had been stripped out,” he added. “The windows were blacked out, so it was hard to tell.”

The Tesla also appeared to have semi-slick tyres, used only on racing circuits and unsuited for everyday use, Baldauf said. A Porsche spokeswoman told Reuters that its Taycan was tested using standard road tyres. Notary Jens Boehle, who certified lap times by Porsche, said, “Scope for cheating is as big as you can imagine. Is it a prototype vehicle, a standard road legal vehicle, or is it a specially modified racing version of a standard road car? These are just some of the questions that need to be answered.”

Tesla chief Elon Musk responded on Twitter, writing: “The final configuration used at Nürburgring to set the record will go into production around summer 2020, so this is not merely for the track”.

Tesla declined to comment further on its Nuerburgring lap record attempt.

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