As long expected, it appears that Tesla is now actively considering construction of an assembly factory in China — following the emergence of strong Model 3 demand in the highly populous nation.
Tesla Model 3 reservations in China were actually higher than in any country in the world other than the US, according to Tesla’s Asia Pacific head, Ren Yuxiang — making it appear that the company’s noted interest in the market has been well placed.
Tesla’s Chief Technology Officer, JB Straubel, was recently quoted (while participating in a panel discussion at the International Transport Forum in Leipzig, Germany) by China Daily as saying that, with Model 3 interest growing, the development of a factory in China was making more economic sense.
Gas 2 provides more:
Last fall, Elon Musk set of a firestorm when he was quoted as saying all Model 3 cars would be manufactured in China. He was quick to point out that a translation error was responsible for the mix up, but tweeted that a Chinese factory was definitely being considered.
…China is a tricky market for all manufacturers. Foreign companies are often required to partner with a local company. Such partnerships often involve more of a transfer of technology than Tesla may be comfortable with. However, in order to avoid significant import duties that drive up the price of cars made outside the country, other global manufacturers have found it necessary to form such alliances. Tesla is said to be exploring partnerships with several Chinese automakers, but has not yet concluded an agreement. Nor has it decided the best place to locate its factory in China. Another unanswered question is whether it would only manufacture the Model 3 in a Chinese facility or also begin making its Model S sedan and Model X SUV in China as well.
Tesla is also considering the development of a facility in Europe, of course, eventually. Given the company’s plans for the rapid scaling up of production for the Model 3 launch, one would presume that there aren’t enough funds lying around to do both immediately. Which comes first is an interesting question — Europe is a huge market for Tesla, but conversely, China represents a huge opportunity for sales growth.