Tesla Prepares For Shanghai Gigafactory Expansion

Tesla Prepares For Shanghai Gigafactory Expansion

Tesla Inc. (TSLA) is preparing to expand its Gigafactory in China with a boost in production capacity for components such as powertrain and motors, cnEVpost reported Saturday.

What Happened: Citing an environmental assessment report, cnEVpost reported that Tesla’s Shanghai factory has made adjustments to a project in order to boost production capacity for components. cnEVpost is a China-focused EV website.

The manufacturing process adjustments will enable Tesla to increase its annual production capacity of pure electric vehicle power battery packs, drive motor systems, and motor controllers, as per the report. The electric car maker currently manufactures the Model 3 sedan and Model Y compact sport utility vehicle at the Shanghai factory.

While reporting its fourth-quarter results in January, Tesla said that the Shanghai factory can sustain Model 3 production at or above a run rate of 250,000 per year. Model Y production at the factory started in late 2020 and is in the process of ramping to full capacity.

Why It Matters: The electric car maker has previously said it planned to fulfill its localization commitment to the Chinese government and shorten the issue of long lead times for parts imported from the U.S.

The adjustments to the manufacturing processes are also part of Tesla’s efforts to boost sales in China, the company’s second-largest market. In February, Tesla said its China sales doubled on a year-on-year basis to $6.6 billion.

In January, Tesla opened pre-orders for the Model Y in China, only to sell out three months’ worth of vehicles in a matter of days.

Price Action: Tesla shares closed 0.8% lower on Friday at $693.73

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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