Tesla Responded That It Would Build a Second Plant in Shanghai?

Tesla: The argument of expanding production is more reliable. Where will it build a plant?

On the afternoon of May 5, Tesla responded that it would build a second factory in Shanghai,this triggered a heated discussion among netizens.

According to media reports, in a letter of thanks to Lingang New Area of China (Shanghai) pilot Free Trade Zone on May 1, Tesla proposed that Tesla plans to build a new plant near the current Tesla Shanghai Super factory for the production of model 3 and model y, which is expected to increase the annual production capacity of 450000 vehicles and become Tesla’s “largest automobile export center” in the world.

Tesla officials said that Tesla has planned a large area of land near the existing plant area, which has been included in the new capacity planning in the future. The news has been shown in a land transfer announcement posted on the official website of Shanghai land trading market in early March: the plot covers a total area of 461142.40 square meters, is located in the port heavy equipment industrial zone of the free trade zone, and the access industry type is the manufacturing of new energy vehicles. Obviously, this area has a great probability of being used for Tesla plant expansion.

According to the Xiaoxiang Morning Post, Tesla insiders responded to the “second plant will be built in Shanghai” by saying that it is only an expansion of production, not a second plant. Although the capacity of the new plant is equivalent to that of a super plant, Tesla has never defined it as a “second plant”. Therefore, it is still unknown whether Tesla will have a second factory in China and where to choose a site.

If Tesla wants to build a second factory in China, the easiest way is to find a city according to Shanghai’s standards.
The media generally believe that the site selection of Tesla factory must meet the following four basic conditions: economically developed; It has a complete automobile industry chain; Have large ports; Close to the core market.

① Economically developed: basically in the first tier or strong second tier cities, the Yangtze River Delta, the Pearl River Delta, Chengdu Chongqing and developed cities along the eastern coast.
② It has a complete automobile industry chain: the five largest cities with the highest automobile output in 2021 are Guangzhou, Shanghai, Changchun, Chongqing and Liuzhou. If Tesla wants to select the second factory, the higher the urban automobile output, the higher the accumulated automobile production and manufacturing experience, which is more conducive to efficient production.
③ Having large seaports: Tesla is a global enterprise whose products cover the global market. Only close to international large ports can it be more convenient to sell electric vehicles all over the world.

④ Close to the core Market: it means lower transportation cost and easier to form scale effect. Overall, there are five major consumer markets in China, namely Beijing Tianjin Hebei, Yangtze River Delta, Guangdong, Hong Kong and Macao, Chengdu Chongqing urban agglomeration and urban agglomeration in the middle reaches of the Yangtze River.

Why is it so important to compete for Tesla?

First of all, the introduction of Tesla is a cost-effective economic account. According to statistics, the total output value of Shanghai’s new energy vehicle industry in 2021 was 177.256 billion yuan, of which the output value of Tesla Shanghai factory located in Lingang New Area exceeded 150 billion yuan, accounting for 85% (76.6%). Driven by Tesla’s Shanghai factory, the scale of intelligent new energy vehicle industry proposed by Lingang New Area is expected to exceed 300 billion yuan by 2025, becoming a gathering place of intelligent new energy vehicle industry with global influence.

Not only that, according to the “gambling agreement” previously signed between Tesla and Shanghai, Tesla’s Shanghai factory will create annual tax revenue from the end of 2023, with an annual tax payment of RMB 2.23 billion. In the face of this promising and attractive “economic account”, any city with strength and ambition cannot be unmoved.

Secondly, Tesla helps to seize the new track of urban industrial competition. With the acceleration of scientific and technological innovation and industrial reform, and “double carbon” has become the general trend of economic development, the intelligent new energy vehicle industry has gradually become an important track of urban competition.

Globally, it is estimated that by 2025, the global sales volume of new energy vehicles will reach 18 million; By 2030, the global sales volume of new energy vehicles is expected to be more than 30 million. Domestically, the overall penetration rate of new energy vehicles is expected to reach 50% by 2035. This is not to mention the “spillover effect” achieved by the integrated development of energy, machinery, transportation, power electronics, communications, software, big data and other disciplines and technologies promoted by the intelligent new energy vehicle industry.

Once Tesla’s fifth factory in the world is located in a domestic city, it will play an inestimable role in continuously enhancing the basic capacity of its intelligent new energy industry, improving the modernization level of its supply chain, and then seizing the commanding height of the development of many strategic emerging industries such as new generation information technology, high-end equipment manufacturing, new energy and new materials.

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