Tesla Begins Manufacturing of Model Y in China

Tesla had announced that it had begun manufacturing of the long-range version of the Model Y at its Gigafactory in Shanghai. The first Chinese-made Model Ys are being delivered to buyers who pre-ordered them. Gigafactory Shanghai had already been manufacturing the Model 3, with 22,000 of these vehicles being delivered in the Chinese market in November 2020.

Pre-sale prices for the Chinese-made Model Y started at $52,074 for the long range version and $57,235 for the performance version, about a third cheaper than Tesla announced in August although still in line with Tesla’s reputation for being the status symbol of electric vehicles. The performance version of the Model Y is expected to begin delivery in the third quarter of this year. Most Model Y vehicles sold in China will be black, although customers can choose another color for a $1,238 premium.

China is expected to be one of Tesla’s strongest markets, with forecasts from analysts like Wedbush’s Daniel Ives saying that the automaker could sell as many as 400,000 electric vehicles in China and up to one million total vehicles worldwide in 2022.

Tesla is working on ramping up its manufacturing capacity to meet that level of demand with the continued construction of Gigafactory Berlin, which may be hampered by a successful legal challenge by German environmental groups. Tesla is also considering a possible new Gigafactory somewhere in the United States and the possibility of higher-capacity Terafactories somewhere on the horizon.

The Chinese market could come with its own set of challenges, including competition from domestic competitors like startups Nio, Li Auto, and Xpeng all posting strong sales in 2020. Li Auto did especially well for being a brand new company, delivering 32,624 vehicles in its first full year of trading. Nio and Xpeng both say that they have doubled their sales in 2020.

Tesla has also had to deal with bad publicity that includes allegations of “sweatshop” conditions at Gigafactory Shanghai that has led to the company filing a libel lawsuit against Chinese news outlet PingWest — a statement that may not shock any Chinese residents that can see through the government propaganda, as China has long been accused of abusive labor practices that include harsh prison labor and forcing minorities like the Uighur Muslims into slave labor. Although CEO Elon Musk has developed something of a reputation for being a demanding boss to work for, which has led to occasional legal battles with disgruntled former employees, Tesla maintains that the allegation of running a sweatshop factory is false.

Like many automakers, Tesla has had to deal with its share of recalls, including one recall of nearly 30,000 Model X and Model Y vehicles that had been manufactured in California and imported to China to fix a defective part in the vehicles’ suspension units.

Despite the challenges, deliveries of the long-range Model Y manufactured at Gigafactory Shanghai have begun a little earlier than showroom staff in Shanghai had estimated. They had told customers that it might begin delivery in February.