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Tesla Will Build a Second Factory in China

The question is no longer whether Tesla can meet demand, but just how high that demand can continue to grow Automotive columnist: , Updated:

It seems like ages ago but wasn’t that the biggest question surrounding Tesla was whether it could produce enough vehicles to meet demand. That question has been largely put to bed, as the company has responded well, opening factories in Germany and China outside the United States.

The California-based EV maker has been making vehicles in China since 2019. This week, the company confirmed that it would build a second factory to meet the strong demand, both in that market and globally.

Tesla made the announcement via a letter sent to officials in the Lingang Special Zone in Shanghai, where Tesla's current factory in China is located.

In regards to that Lingang Special Zone, a short explanation is in order. Usually, to assemble vehicles in China, a carmaker has to rely on a local partner. But Lingang is a free trade zone south of Shanghai, with distinct regulations. The Tesla factory there is the first facility with foreign ownership to be 100-percent foreign-owned. The plant cranked out 484,130 vehicles in 2021, more than half of Tesla's record 936,000 models delivered last year.

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In its letter, a copy of which was obtained by Reuters, Tesla says it is targeting annual production of 450,000 vehicles at the new facility, which will be located near the existing factory. The first vehicles assembled in the new factory are expected to be Model 3s and Model Ys.

Tesla has also just completed construction of a factory near Austin, Texas. That plant will produce the Model Y and, eventually, the long-awaited and already infamous Cybertruck, which has been delayed until 2023. And it doesn’t end there - Tesla has also just completed a factory near Berlin, Germany, to build Model 3 and Model Y EVs.

Tesla's first factory, in Fremont, California, still produces the Model S, X, 3 and Y, and the company also has a new factory in Reno, Nevada, used to make Tesla vehicle components and energy storage products.