By Todd Horwitz

Tesla Set to Expand China Assembly 

Tesla Inc. said it has begun preparing its new China factory for the auto maker’s next all-electric vehicle, a compact SUV, as Chief Executive Elon Musk visited the country about a week after the first delivery of locally made Model 3 sedans.

Mr. Musk danced on the stage during a ceremony Tuesday at Tesla’s Shanghai factory that featured the delivery of Model 3s to customers not employed by the company. On Dec. 30, employee-customers received the compact car.

The Palo Alto, Calif., company said it is starting work related to the Model Y sports-utility vehicle at the Shanghai factory, its first overseas assembly plant. Tesla didn’t elaborate on the nature of the work, but its Chinese website said Model Y production could begin as early as 2021.

During his speech, Musk said it would be “super cool” to open a design center in China and create original Tesla cars in the country to sell to the world. “I think this would be very exciting. I think China has some of the best art in the world. And I think it’s something that would be appreciated on a worldwide basis,” he added. “I think it should be done, and we’re going to do it.”

Musk also thanked the Shanghai city government for its help in the rapid completion of the factory. Tesla broke ground on the factory about a year ago and finished the plant in about 10 months. The company has been taking orders for Shanghai Model 3s since October 25. Last Monday, the first batch of cars were delivered to some Tesla employees in Shanghai.

Days later, Tesla slashed the starting price of its Shanghai-made Model 3 sedan to 323,800 Chinese yuan ($46,650) from 355,800 yuan ($51,260). With government subsidies, the cost could drop to as low as 299,050 yuan ($43,080). Tesla built the Shanghai factory to grow its business, pump out more cars and better target Chinese customers. The facility could also push production costs lower.

Tesla isn’t new to the Chinese market — it’s been delivering cars there since 2014, when Musk flew to Beijing and personally handed over the keys to Tesla’s first Chinese customers. But Musk has touted the new Shanghai factory as a “template for future growth.” The company has said it wants to eventually make 500,000 cars a year in Shanghai. Its current capacity is 3,000 Model 3s a week, Tesla said in a post on Weibo on Tuesday.

Todd “Bubba” Horwitz