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Published on November 22nd, 2019 | by Steve Hanley

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Tesla Experience Centers In China Receive First Model 3s, Panasonic Passes On China Battery Factory

November 22nd, 2019 by  


Tesla has 49 so-called Experience Centers in China where people can go to learn more about Tesla automobiles. CNN reports that Model 3 sedans built at Gigafactory 3 in Shanghai are now available at those Experience Centers for test drives, citing a post Tesla made on WeChat. The Model 3 is also featured at an international car show in the city of Guangzhou that opened last Friday.

Tesla Model 3 China

The cars manufactured in Shanghai are priced from 355,800 yuan — $50,623 — which is 2% lower than a Model 3 imported from the factory in Fremont, California. Tesla began accepting online-only orders for the domestically produced Model 3 on October 25. The cars built in Shanghai will  use batteries sourced from Panasonic, LG Chem, and CATL, CNN says. Tesla expects the Shanghai factory will have an annual production capacity of 150,000 cars, but there are already plans being made to expand the it to meet demand or to build other cars like the Model Y.

In a recent letter to shareholders, the company said the factory in Shanghai was 65% less expensive to build than the Model 3 factory in Fremont. Elon Musk has described the new factory as a “template for future growth,” which offers a clue about the factory Tesla announced last week that it will build outside Berlin.

In our story about that factory, several readers commented that the rapid pace of construction in China — it took a mere 10 months from groundbreaking to start of production — will not happen in Germany. Maybe not, but a lot of people have lost a lot of money betting against Elon Musk and Tesla. Whatever lessons Tesla learned from building its China factory will be applied to the construction of the Berlin factory. It would take a miracle for the German facility to be spitting out cars before the end of next year, but for Tesla, miracles are just business as usual. The company has high hopes for growth in China, the world’s largest electric car market.

The new car market in China is enormous, and even though it has contracted somewhat this year, there will still be nearly 25 million new cars sold in China in 2019. Tesla needs only a small percentage of them to meet its goals. “China is by far the largest market for mid-sized premium sedans. With the Model 3 priced on a par with gasoline powered mid-sized sedans, we believe China could become the biggest market for the Model 3,” the company said last month.


Panasonic Says No China Battery Factory For Tesla

When Tesla began building Gigafactory 1 in Nevada, Panasonic was a major partner in the endeavor. But things have not turned out as well financially for Panasonic as it hoped. The companies are still doing business together but their love affair has definitely cooled.

Reuters reports that Panasonic CEO Kazuhiro Tsuga told the press at a briefing in Japan this week that his company has no plans at the moment to build a battery factory in China for Tesla. “It is up to Tesla to decide whether it would use Chinese-made batteries from other manufacturers or get batteries from our Gigafactory 1 (in Nevada),” he said. Earlier this year, Tsuga acknowledged his company may have underestimated the risks that came with the Tesla partnership.

Purchasing batteries made in the US may not be in the cards. The Chinese government has shown a strong preference for the batteries that power electric cars sold in China to be manufactured in China. Last year, Hyundai and KIA were suddenly barred from selling electric cars with batteries made in South Korea. As soon as they switched their source of supply to China, the problem magically disappeared.

In August, Bloomberg reported that LG Chem would supply at least some of the batteries for the Model 3s built in Shanghai from its factory in Nanjing, which is located about 200 miles away. CATL may also be in the mix. At the time of that report, anonymous sources said both LG Chem and CATL were discussing technical specifications with Tesla and that LG Chem was more flexible in meeting Tesla’s technology requirements. So it seems that if any Panasonic battery cells wind up in a Chinese made Model 3, they will only be a stop gap measure until Tesla can get its local supply chain established.

With Panasonic declining to build a battery factory in China, it has severely limited its future involvement with Tesla’s plans for the Chinese market — a curious decision considering how massive the market for EVs may be in the future. And then there is the prospect of providing batteries for Tesla products manufactured in Germany and other locations around the world. It seems fair to say that the Tesla/Panasonic marriage is most definitely on the rocks. 
 

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About the Author

Steve writes about the interface between technology and sustainability from his homes in Florida and Connecticut or anywhere else the Singularity may lead him. You can follow him on Twitter but not on any social media platforms run by evil overlords like Facebook.



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