| 5:18 PM EST

Tesla’s China Plant Back in Business

EV maker resumes production in China.
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Tesla’s shiny new assembly plant in Shanghai is making Model 3 electric sedans again.

Like almost everything else in China, the 2-month-old factory ground to a halt at the beginning of the month after government officials ordered shutdowns to help blunt the coronavirus outbreak.

The $2 billion facility got back to business on Feb. 10. That is sooner than the dates set by several other producers, including Honda and Toyota.

Rollercoaster Stock Price

Tesla’s suspension reversed a surge in the company’s stock, triggering a drop from $887 on Feb. 2 to $735 three days later. Share prices have climbed 5% since then.

The coronavirus crisis had a more modest affect on the availability of Model 3s in China. That’s because the Shanghai plant, which opened at the end of December, is still in startup mode.

Tesla continues to supply most Model 3s for China from its home plant in California. It knows it will slash costs and hike sales by sourcing its cars locally. The company has said it will cut the price of China-built models 9% to $46,500. Reports speculate prices for domestic models will drop to around $41,000 by year-end.

Fuzzy Production Goals

Tesla claimed in early January that the Shanghai factory had already hit an output rate of 1,000 cars per week. But that doesn’t mean the plant’s throughput is anywhere near that pace.

If past production claims by CEO Elon Musk are any indication, Tesla meant that the facility functioned for several hours at a pace that extrapolates to a weekly throughput of 1,000 vehicles.

Musk got into hot water with investors a year ago when he predicted the U.S. plant could make 500,000 Model 3s in 2019. He soon corrected himself, saying the factory would make 400,000 cars but reach an annualized run rate of 500,000 in December.

In China, Tesla says it doesn’t expect to reach a weekly production rate of 2,000 cars until the end of 2020. No telling yet what the actual throughput will be by then.

 

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