Tesla Officially Breaks Ground at Shanghai Gigafactory 3

Tesla CEO Elon Musk claims only lower-end Model 3s and the upcoming Model Y will be produced at the Chinese factory.

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Tesla Officially Breaks Ground at Shanghai Gigafactory 3 © Tesla Officially Breaks Ground at Shanghai Gigafactory 3

Tesla CEO Elon Musk appeared at a press event in Shanghai on Monday morning to take part in the groundbreaking ceremony for the automaker's third Gigafactory. The large facility had previously been fenced in to prepare for construction, however, had not begun to build up in any capacity before today.

In a later tweet, Musk also confirms that Gigafactory 3 will serve the "greater China region" and produce both Model 3 and Model Y vehicles. Interestingly, it appears that only the lower cost Model 3s will be built at Gigafactory 3; all "higher cost" versions of the automaker's entry-level sedan will be assembled at in Fremont, California while its batteries are produced at Gigafactory 1 (which is only 30 percent complete). In an earlier quarterly earnings call, Musk confirmed that the Model S and Model X luxury vehicles will continue to be produced Stateside.

Tesla opened up ordering for the Model 3 in Europe and China late last week. The final cost for a Model 3 in the Chinese market will run consumers between $72,600 for the Long Range Dual Motor model all the way to $92,500 if purchasing a fully equipped Performance variant, which according to the information above, will likely be produced in Fremont.

Furthermore, Musk also tweeted about the Model Y's production taking place at the new facility in Shanghai. Despite the prototype of the Model Y being approved, Tesla has remained relatively tight-lipped about the details behind the upcoming crossover but did confirm that it would follow the Model 3's split-assembly between the U.S. and China. The CEO previously estimated that Tesla would reveal more details about the Model Y as early as mid-March.

Musk proclaims that initial construction of Gigafactory 3 will be completed in Summer and have assembled Model 3s rolling off the line as early as the end of the year. He continues to states that high volume production would begin to take place next year, however, the timeline behind this claim may be questionable considering that the automaker has not met its repeatedly re-affirmed production target of 10,000 units per week. According to sales figures released by the automaker, Tesla averaged less than half of this number per week by the end of 2018, or roughly 4,858 units.

Tesla's Fremont plant has the capacity to produce, at most, 7,000 vehicles per week in its current state. During the Q3 earnings call, Musk stated that in order for Fremont's production to increase to 10,000 vehicles per week, the General Assembly lines would have to slow or pause in order to perform upgrades. He also speculated that anything above 7,000 to 10,000 units per week would be produced at other facilities, such as Gigafactory 3, to produce the remaining volume. Outside of the United States, Tesla believes that the weekly demand for its vehicles would be between 5,000 and 8,000 units.

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