Tesla gets final approval to start production in China

Tesla has received final permission from the Chinese government to start Model 3 production in its $2 billion Shanghai Gigafactory.

The Chinese industry ministry has added the American EV maker to a list of government-approved car manufacturers, Reuters has reported.

This means that, although the factory has yet to be completed, Tesla is legally able to begin making cars and could do so in as little as a few weeks.

The first car to be rolled out of the factory will be the Model 3 saloon, to be joined later by the closely related Model Y SUV. The older Model S and Model X won’t be produced in China, as Tesla focuses its attention upon the expected volume-sellers.

In terms of numbers, Bloomberg notes that the Shanghai facility will be capable of producing 500,000 vehicles per year. However, Tesla’s minimum targets are only 10% of this, with the bulk of production – targeted at 500,000 this year – taking place in the company’s factory in Fremont, California.

Compared with the US, China is arguably more amenable to Tesla’s ambitions, since the government heavily subsidises electric vehicles.

Tesla will be able to capitalise on incentives such as purchase tax exemption on domestically produced EVs, as well as easier-to-secure licences. It also allows the firm to bypass the increasingly worrying trade war between China and the US.

More than 1.2 million EVs were sold in China in 2018, making it the world’s largest market for EVs by a significant margin.