Tesla delivers first fleet of China-made Model 3 sedans

The lower-priced EVs are assembled at the company’s Shanghai manufacturing plant – its first outside the US

Tesla delivered 15 China-built Model 3 sedans to its employees in Shanghai on Monday. Bloomberg

Electric vehicle manufacturer Tesla delivered its first fleet of 15 China-built Model 3 sedans to its employees on Monday, in a special ceremony at the company's Gigafactory in Shanghai.

The vehicles are assembled from scratch at the company's Shanghai manufacturing unit – its first outside the US. Deliveries to customers will start next month.

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

The Shanghai plant is part of Tesla’s plans to strengthen its presence in the world’s largest EV market and lessen the impact of the US-China trade war.

The China-made Model 3 cars are priced at 355,800 Chinese yuan (Dh186,764) before subsidies, while imported Model 3 cars start at 439,000 yuan.

The Shanghai Gigafactory, first unveiled in July 2018, currently produces about 1,000 cars a week, a figure it aims to double next year.

In November, Tesla's billionaire chief executive Elon Musk predicted a weekly production of 3,000 EVs from the Shanghai plant at some point in the future.

The EV share of global car sales is forecast to rise to 2.5 per cent by 2020, from 1 per cent in 2017, according to the Bank of America Merrill Lynch, which predicts that EVs will constitute 90 per cent of sales by 2050.

However, global passenger EV sales have fluctuated this year, reaching a high of 608,000 in the second quarter of 2019 before dropping to 480,000 units in the third quarter – down 21 per cent quarter on quarter and 8 per cent year on year, according to Counterpoint, the Hong Kong-headquartered researcher.

Tesla led the market in the third quarter to September 30, taking 20 per cent of the global market share of EV sales, Counterpoint said.

It was followed by Chinese car makers BAIC Group at 10 per cent and BYD Auto at 9 per cent, and German car-maker BMW with 8 per cent.

In China, the Model 3 will compete with local brands, such as NIO and Xpeng, and also global companies including BMW and Daimler.

On Friday, the Model 3 was included on a list of models qualifying for an exemption from a 10 per cent purchase tax in the country.

The China-built model also qualified for a government subsidy this month of up to 25,000 yuan per vehicle, offering another boost to Tesla.

As part of its China expansion, Tesla plans to add dozens of locations in the country over the next year to showcase its vehicles and provide charging and other services, according to a Bloomberg report.

The company expects to lower the price of the locally assembled sedans by up to 20 per cent or more next year as it starts using more local components and reduces costs.