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Morgan Stanley: Tesla May Open Shanghai Gigafactory Sooner Than Forecast

Tesla could open its Chinese factory currently under construction in Shanghai sooner than forecast, Morgan Stanley said on Wednesday, adding that it expects the U.S. electric vehicle maker to become “the leading luxury EV player in China.”  

Morgan Stanley analysts, fresh from a visit to some Chinese suppliers of the Shanghai Gigafactory, said in a note on Wednesday, carried by Business Insider, that if those suppliers were right on their feedback on the factory’s progress, “Tesla may be able to ramp China production faster than we have currently anticipated in our model.”

In January this year, Tesla’s chief executive Elon Musk joined the mayor of Shanghai for the groundbreaking ceremony of Tesla’s first factory outside the U.S. and in the world’s largest EV market, China.

Tesla aims to finish the initial construction of the Shanghai Gigafactory this summer, begin production of Model 3 by the end of this year, and reach high volume production next year, Musk wrote on Twitter on the day of the event in January.

Tesla has started the construction of a production facility in the world’s top EV market in order to be able to compete on a level playing field with a growing number of local EV manufacturers. As a U.S.-made vehicle, Tesla’s cars in China have been subject to steep tariffs, and sales have suffered in recent months due to the U.S.-China trade war.

Currently all Tesla cars sold in China are made in the United States and then shipped to China, which adds logistics costs, import tariffs, and the risk of additional tariffs if the trade war further escalates. The imported Tesla vehicles are not eligible for subsidies either.

In early June, Tesla launched pre-orders for its China-made Model 3, pricing it well below the imported Model 3 and saying deliveries from the Shanghai factory will begin in six to ten months

Tesla’s third Gigafactory, one that will provide it with a way around Chinese tariffs on U.S. goods, is being built “at an incredible speed,” Electrek’s Fred Lambert wrote later in June.

By Tsvetana Paraskova for Oilprice.com

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  • Lewis Bagwell on July 19 2019 said:
    To make a large investment in China with a Chinese partner is one thing that has worked for some and not for others. To bet your entire company fortune going forward on the unknowns of China is like rolling the dice with everything you have with ZERO knowledge of how it is going to turn out. Tesla is a publicly traded company that is owned by the stockholders. Elon Musk is seen as a genius risk taker. Since he owns so much Tesla stock he has a lot of skin in the game so he is also gambling his money...but the millions of Chinese live in apartments (not houses with places to charge a car) and buy most their cars for less than $10,000. To make a plant that turns out a half million $55,000 cars is either extremely insane or smart. I am a great believer in business plans that study the idea and are ultimately approved by the Board before billion dollar moves are made with company money. Everything I read about Tesla and the decision to move most of the car business to China is by the seat of Elon's pants with 50 other flamethrower products going through his brain at the same time. I hope life treats Tesla well but gambling the entire company's future based on just what he thinks (does not know) is not part of a CEO's function. The variables are endless. Let's hope the poor Chinese put one in every driveway.

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