CEO Elon Musk clarified Monday that the factory should begin production on Models 3 and Y for greater China by the end of this year.
“Aiming to finish initial construction this summer, start Model 3 production end of year & reach high volume production next year,” Musk said in a tweet.
Why It’s Important
Analysts consider the new assembly line critical to the bull thesis as it reduces barriers to and lends Tesla a competitive advantage in the world’s largest auto market.
With China’s first wholly foreign-owned auto plant, Tesla will circumvent high import tariffs and bolster its international margins as competitors Ford Motor Company (NYSE: F) and General Motors Company (NYSE: GM) suffer regional declines. Lower-cost sales allow Tesla to cut its international price and capture a broader consumer group.
“Shanghai Giga will produce affordable versions of 3/Y for greater China,” Musk tweeted Monday, noting the U.S. sites will continue to construct higher cost versions and all Models S and X for the global market.
Whether Tesla will pursue a capital raise for the new factory remains a matter of speculation.
At time of publication, Tesla shares traded up 4.1 percent at $331.12.
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