With more than 21.5 million new passenger cars sold in 2021, China is by far the world’s largest car market, and everyone who’s anyone in the automobile industry has manufacturing operations there.
Tesla makes no exception and its investments in the Giga Shanghai assembly complex are paying off big time, as the China is by far Tesla’s biggest overseas sales market. Despite that, the EV maker constantly has to explain why it places such a big emphasis on China, especially now that Chinese-US relations aren’t at their best and the two countries are engaged in strategic competition.
On a visit to Australia, Tesla Chair Robyn Denholm was asked about the company’s focus on China and plans to expand further there. Bloomberg reports that she defended Tesla’s commitment to China by saying that reaching a goal of making 20 million vehicles a year by 2030 will require manufacturing capabilities on every continent.
“We’re building factories around the world. Our view is the world is going to electric vehicles and to batteries that are lithium-ion based and we need to be in all of the major markets around the world.”
Tesla has set a goal of building 20 million electric cars a year by 2030, up from the just under the 1 million vehicles it produced in 2021. The Shanghai upgrade alone doubled the factory’s annual capacity to about 1 million units.
In her address to the National Press Club in Canberra on September 14, Denholm further explained why Tesla’s strategy to build vehicles on all continents is important when it comes to reducing vehicle distribution costs.
“Producing vehicles on continents is important because, again, when you’re setting a supply chain for the long term, you want those miles those cars travel before someone actually owns them to be the shortest possible, and that includes shipping and sea freight because all of those processes add to CO2 emissions.”
She added that having manufacturing capability on each of the continents matters because of markets around the world that are really important.
Tesla’s China operations are back to full throttle after a production line upgrade and after Shanghai’s Covid-19 lockdown earlier this year slowed production. The automaker delivered 76,965 Chinese-made vehicles in August, almost matching June’s record 78,906.