First 15 Model 3 electric cars go to employees and US firm will ramp up production in 2020

This article is more than 8 months old

This article is more than 8 months old

Tesla has delivered the first vehicles it has made in China, marking a major milestone in the electric carmaker’s global expansion efforts.

The first 15 Model 3 cars to roll off the line at the US carmaker’s Shanghai factory went to customers who were Tesla employees and were handed over in a ceremony at the plant on Monday.

Tesla will ramp up production during January, marking the start of a full-on assault on the world’s largest car market. It has taken less than a year from the start of construction of the $5bn (£3.8bn) Shanghai factory in January to the delivery of the first vehicles.

The factory, announced in July 2018, is Tesla’s first facility outside the US and will have an annual capacity of 150,000 Model 3 cars per year, compared with 350,000 in its main factory in Fremont, California.

Facebook Twitter Pinterest A Tesla employee proposes to his girlfriend with a China-made Tesla Model 3 vehicle filled with flowers at the delivery ceremony at the Shanghai factory. Photograph: Sun Yilei/Reuters

Tesla is aiming for China to become the largest market for its Model 3, outstripping the US. China is already the largest market for mid-sized premium sedans that rival the Model 3, according to IHS Markit data cited by the carmaker.

“From now onwards, China-made Model 3 vehicles will start running on China’s large streets and small lanes,” Tesla’s vice-president, Tao Lin, said.

The carmaker will enter a crowded field, with some reports suggesting there are hundreds of companies aiming to mass-produce electric cars. However, industry insiders expect many of these to fail and a recent slump in Chinese car sales has caused severe difficulties for some of the more established names. For electric carmakers the general slump has been exacerbated by cuts to government subsidies.

The subsidy cuts prompted the Warren Buffett-backed electric carmaker BYD to slash its profit forecasts in October. Nio, a premium carmaker pitched as a direct rival to Tesla, was forced to raise $200m in September from its chief executive and major shareholder, Tencent, in response to deepening losses.

Nio on Monday announced revenues rose by 22% to 1.7bn yuan (£190m) in the third quarter of 2019. That was higher than expected by analysts, but Nio said that its continued operation over the next year still depended on raising new finance.

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Tesla has bet billions of dollars on China, with its Shanghai factory opening well ahead of another planned “gigafactory” in Berlin, its first in Europe.

Tesla claims its Model 3 pricing will put it on a similar level to fossil fuel-powered mid-sized sedans, even before gas savings and other benefits.

Shanghai will also produce Tesla’s Model Y crossover SUV, which is built using the same platform as the Model 3. Model Y deliveries are scheduled for the summer of 2020.