Tesla seals Chinese deal for second factory

Californian electric car maker Tesla has signed a deal with the Chinese government to build its second car factory in Shanghai.

Construction on the new car plant is scheduled to begin in 2019 and is expected to take about two years to build.

Once complete, it will be able to pump out around 500,000 cars per year, helping to reduce the bottleneck of pre-orders for the Model 3, Tesla’s most affordable and in-demand vehicle at present.

The mid-size Model 3 sedan and upcoming Model Y small SUV – both based on the same underpinnings – are expected to be the mainstay products of the new factory.

The new factory has ramifications for Australia as there's potential for our cars to be sourced from China, given its closer geographical proximity than Tesla's US factory in Fremont, California.

China is a crucial market for the EV brand, given it's the world's largest new vehicle market and also the world's largest EV market.

The new factory is also likely to supply the wider Asian region – presumably including Australia – said Telsa CEO Elon Musk in late 2017.

However, Telsa Australia was unable to comment on whether it would look at sourcing Chinese vehicles in future.

Tesla Australia continues to say first local Model 3 deliveries will take place from mid-2019, even though Musk has announced the same timing for the start of global right-hand drive production.

It says Australian customers who have placed a $1500 deposit since orders opened in March 2016 are “willing to wait” for the Model 3, exact local pricing for which is yet to be announced.

Telsa has struggled to build enough cars to meet customer demand for the Model 3, which has attracted more than 450,000 orders globally.

Earlier this month the company met its production target of 5000 Tesla Model 3 vehicles per week, as part of its promise to investors and its bid to turn a profit for the first time.

However, this number was met only with the implementation of a new outdoor production line contained within a tent and forced overtime for workers, and came at the expense of Tesla Model S and X production.

Beyond the Model 3, a BMW 3 Series rival that has a range of 350km in basic form and 500km in premium trim, Tesla has promised to deliver a small SUV called the Model Y, which has already been delayed until 2020, a second-generation Tesla Roadster and the Semi big-rig.

Later this year, Tesla is expected to confirm plans for a third car factory, in Europe.