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Will Tesla Finally See Profits as Model 3 Production to Increase?

Recent reports from China revealed that Tesla is looking to start Model 3 production there sometime in the next few weeks.  With investors eager to see evidence of profit and the ongoing U.S.-China trade war not slowing down, it is more important than ever that Tesla and the Gigafactory 3 hit the ground running.  Will Tesla be able to make their projected production numbers and become profitable again, or will having an additional source of the Model 3 glut the market and cause more problems?

Gigafactory 3 Update

According to an unnamed source at Tesla, the electric car company has been cleared to start production of the Model 3 in China as early as October of this year.  However, they question when Tesla will actually be able to pull off its initial target production of 1,000 to 2,000 Model 3 vehicles at the Shanghai factory. 

“We aim to start some production in October, but the actual production volume depends on many factors including car orders we received, performance of newly hired workers, supply chain and so on,” the source told Reuters.  He declined to be named, as he was not cleared to speak to the media.

Tesla’s $2 billion factory is the keystone in Tesla’s plan to reach the world’s biggest auto market and avoid the high import taxes on U.S. cars.  Being able to meet its mass production goals in China is critical to Tesla’s hopes of making its total annual production goal of 500,000 vehicles in 2019. 

Some are concerned that the Tesla Gigafactory 3 is starting up in the middle of the U.S.-China trade war and while China’s auto market weakens.  Sales numbers for electric vehicles shrunk in August for the second month in a row.  Analysts predict that the previously projected growth at the end of this year will continue to slow.  In contrast, Tesla saw its Chinese sales rise by 98 percent during the first seven months of the year, thanks to a strong demand for the Model 3.

In preparation for the upcoming production of the Model 3 in China, Tesla will cut off orders of the Model 3 Standard Range after October 13th.  That will be the date of the last shipment of Model 3s coming from the U.S., according to Tesla China’s official social media account.

Tesla Model 3: International Sales

While Tesla Model 3 sales have continued to plateau in the U.S., this is not the case in the rest of the world.  In September, Tesla sold 5,768 units of its sedan and found itself to be both the best-selling automobile and the most popular car brand in the Netherlands for the month.  Australia eagerly gobbled up Model 3s in September as well, buying more of them in one month than it bought of both the Model S and Model X during the entirety of 2018. 

If China can continue these trends, Tesla just might see profitability by the last quarter of this year.

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