Tesla’s Latest Aim: Build 500,000 Cars a Year in China

A Tesla charging station in a Shanghai mall. Tesla has reached an agreement with the Shanghai government to build its first foreign plant there.

Still scrambling to sort out production problems at its electric car factory in California, Tesla is taking on another big challenge: building a vast new plant and development center in China.

The automaker said Tuesday that it had reached an agreement with the Chinese authorities to build a battery and automobile factory in Shanghai — its first plant outside the United States — that would eventually be capable of producing 500,000 electric vehicles a year.

The company did not disclose how much it planned to invest in the venture, but it said it would be the sole owner. Other foreign automakers, including General Motors, Volkswagen and Toyota, have been required to form joint ventures with local partners to produce cars in China. But the Chinese government recently said it would ease that requirement.

Tesla said it expected to begin construction as soon as it had obtained the necessary approvals and permits. “From there, it will take roughly two years until we start producing vehicles and then another two to three years before the factory is fully ramped up,” the company said in a statement.

Setting up a plant in China will not be easy, and one of the toughest parts may be finding executives to manage the effort, said Ron Harbour, at auto-manufacturing expert at Oliver Wyman, a consulting firm. “They are trying to get going in California, so who are they going to send overseas to do the same thing?” he said. “That is the question in my mind. You usually want to get it right at home first.”

[Read More: Inside Tesla’s desperate effort to speed up production of its new Model 3 at its factory in California.]

The investment in China is the latest initiative that Tesla’s chief executive, Elon Musk, has announced with lofty ambitions, some of which he has fallen well short of achieving.

Two years ago, Mr. Musk predicted that the company’s plant in Fremont, Calif., would churn out close to 500,000 cars by this year, but the effort has been hampered by overreliance on automated machinery and by production bottlenecks. By the end of June, about 40,000 had been delivered or were in transit.

Last fall, he unveiled a battery-powered semi truck that he said Tesla would begin producing by the end of 2019. The…

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Peter Bordes

Exec Chairman & Founder at oneQube
Exec Chairman & Founder of oneQube the leading audience development automation platfrom. Entrepreneur, top 100 most influential angel investors in social media who loves digital innovation, social media marketing. Adventure travel and fishing junkie.
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