Tesla, Inc. TSLA China Wednesday shared the tidings of the Giga Shanghai factory rolling out the two millionth electric vehicle off the production line. The news assumes importance because the China factory is a vital cog in Tesla's wheels.
What Happened: "The Gigafactory Shanghai achieves 2 million production milestone," Tesla Asia said in a post on X, formerly Twitter. More importantly, the company has managed to hit the milestone in double-quick time.
It took 33 months for Tesla's China factory to produce its one-millionth car and the second million milestone was achieved in just 13 months, the company said.
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Giga Shanghai – A Primer: The Giga Shanghai, aka Gigafactory 3, is China's EV manufacturing plant situated in the Lingang free-trade zone in Shanghai. Construction of the factory started in Jan. 2019 and the first production started on Oct. 23, 2019, with the first EV rolling off the production line in Dec. 2019.
It took just 168 days for Tesla to obtain permits for a finished plant, a Bloomberg report said.
The factory produces both Model 3 and Model Y vehicles. It is also the largest facility of Tesla worldwide. Tesla also operates a small Supercharger assembly unit near the Giga Shanghai.
About 95% of the components used in the factory are produced locally in China, Tesla said on the Chinese microblogging site Weibo, according to South China Morning Post.
Following an upgrade late last year, the plant's annual production capacity was increased by 30% to one million units.
The importance of Giga Shanghai in Tesla's scheme of things is evident from the fact that the company earmarked the plant for manufacturing its recently launched Model 3 refresh.
In addition to the superior production efficiency of the plant, it also provides a cost advantage due to the cheaper input costs, including labor. Margins of made-in-China cars are higher than those produced by Tesla elsewhere. The Giga Shanghai also serves as an export hub for Tesla, as cars from the plant is exported to other Asian countries and Europe.
In the second quarter, Tesla sold 466,140 cars globally with made-in-China sales accounting for 247,217 units or 53% of the total.
Returns From Tesla: A hypothetical $1,000 investment in Tesla on Oct. 23, 2019, would have fetched roughly 59 shares. This is based on a pre-adjusted closing price of $16.98 in the session.
The same number of shares would be worth $14,836.3 now, a neat 1,384% return in four years. In the same period, the S&P 500 Index added a more modest 49%.
In premarket trading on Thursday, Tesla shares fell 1.50% to $ 248.14, according to Benzinga Pro data.
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