Tesla to Roll Out Two Electric-Vehicle Models in Shanghai

U.S. electric-car maker Tesla Inc. is planning to produce two models in its Shanghai factory, with one of them slated to roll off production lines next year.

The factory, in the city’s southeastern district of Lingang, is ready to manufacture the Model 3 and Model Y cars, according to a document (link in Chinese) posted by a private assessment firm on the website of the Ministry of Ecology and Environment. The company was commissioned to conduct a feasibility study for the project.

The news is in line with the announcement made by Tesla CEO Elon Musk in the company’s earnings conference call Wednesday. “We're definitely going to do local production in China. We're moving rapidly on that. So we're driving to have Model 3 production for the China market or the Greater China market active certainly next year,” he said.

Earlier the month, Tesla secured 864,885 square meters of land (213.7 acres) in a $140 million deal with the Shanghai government, pushing ahead its plan for the company’s first overseas “Gigafactory” — Tesla’s term for a large, vertically integrated electric-auto plant. That move followed an initial agreement to set up a wholly owned plant in the city in July.

In August, Musk said Tesla will seek to use local debt to fund its Shanghai factory, which the CEO estimated will cost $2 billion for an annual capacity of 250,000 vehicles. Tesla has said its output will eventually double to 500,000.

Ramping up local productions is important for Tesla, which currently ships vehicles into the world’s largest auto market from the U.S. in a bid to avoid rising tariffs caused by the ongoing trade war between Beijing and Washington. China is Tesla’s second-largest market, where it sold around 17,000 vehicles last year.

Tesla’s Shanghai factory has been made possible mainly due to a policy change earlier this year, when the Chinese government relaxed rules to allow foreign companies to set up wholly owned auto ventures in the country.

Contact reporter Mo Yelin (yelinmo@caixin.com)