Tesla Unveils First Chinese Model 3s As It Looks To Maintain Strong Bottom Line
Last week Tesla Inc's plans for expanding its presence in China highlighted that the company intends to increase the number of repair shops and charging stations that it has in the country. This reveal came after Tesla's CEO Elon Musk claimed that his company will in fact shut down several retail stations to cut costs. Now, Tesla's showing off Model 3s manufactured in its Shanghai Gigafactory. Take a look below for more details.
Tesla Shows Off Model 3s Built In Shanghai's Gigafactory As Company Hopes To Sustain Profitability
Building its cars in China will benefit Tesla massively. The minimum wage in the country is nearly half of that in the United States, and Tesla's own statements claim that the Gigafactory in Shanghai is 65% cheaper to build than the company's production plant in Fremont, California. However, these cost savings are not reflected in the starting prices of the Tesla Model 3.
When Tesla (NASDAQ:TSLA) opened orders for the Model 3 in China last month, the car was priced at 355,800 Renmimbi. This is equal to $50,733, which, as was noted at the time, offers only a 3% discount over the same model imported from the United States. Tariffs applied on the Model 3, on the other hand, stand at 15%, so what's clear is that Tesla is charging its Chinese customers more than what a drop in production costs would entail.
For the time being, it looks like the Model 3's lack of price-parity between the United States and China will help Tesla (NASDAQ:TSLA) with its bottom line. Tesla plans to deliver between 360,000 and 400,000 vehicles this year, The Shanghai Gigafactory will give Tesla's production volume an additional 150,000 vehicle kick - and if the company doesn't have to face inventory backlogs, then it will have no difficulty in maintaining a strong bottom line.
Model 3 production in China is yet to ramp up, and as a part of trial production, Tesla showed off the first Model 3s produced in China yesterday. The vehicles, which you can see above, are in blue and have their brand name written in Chinese. Tesla's Shanghai Gigafactory is waiting to be certified by Chinese authorities, and Beijing has also cut subsidies on electric vehicles. The latter move will make it difficult for Tesla to meet its sales targets, even if the company manages to fully scale Model 3 production.
Thoughts? Let us know what you think in the comments section below and stay tuned. We'll keep you updated on the latest.
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