Jun 13, 2019 03:16 AM

Musk Says Tesla Could Later Build More Factories in China

Tesla's Gigafactory under construction in Shanghai. Photo: Bloomberg
Tesla's Gigafactory under construction in Shanghai. Photo: Bloomberg

(Bloomberg) — Elon Musk signaled that Tesla Inc., which is building its first car plant in China, could eventually have more Chinese factories given the scale of the world’s largest auto market.

“China is pretty big geographically, so it may make sense to have factories in other parts of China in order to reduce logistics costs,” Musk told investors at Tesla’s annual shareholders meeting in Mountain View, California, on Tuesday. “The faster you scale, the more cash you have.”

China is Tesla’s second-largest market after the U.S. The company’s Gigafactory under construction in Shanghai will produce batteries as well as cars for the local market as soon as this year. Musk said Tesla’s announced goal of producing 500,000 vehicles a year at the plant is an “interim” target. Longer-term capacity could top 1 million vehicles, he said, without giving a timeframe.

Local production in China will speed deliveries and help the company improve capital efficiency, the CEO said. At the same time, Musk indicated further expansion in China wouldn’t be imminent.

“We can’t spend money too fast, you know; we’ll run out of it,” he said.

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