Blog Musk Says China Factory Announcement Coming Soon

During Wednesday’s Q1 earnings call, Tesla CEO Elon musk dropped a few new details on the company’s factory plans.

After China recently said it will allow full foreign ownership of auto factories, Musk announced on the call that Tesla’s next Gigafactory will be built in China. In fact, Musk offered thanks to the Chinese government for lifting the restrictions. Previously, automakers needed to work through state-owned partners or pay a 25 percent import tax. This impacted the price Tesla could offer to Chinese customers.

Tesla currently currently builds cars in a former Toyota and General Motors joint facility in Fremont, Calif. The Gigafactory battery plant is located near Reno, Nev.

Musk said that going forward all new Gigafactories will also host vehicle manufacturing. Currently, battery, motor, power electronics and charger production are at Gigafactory, while vehicle assembly takes place in the company’s Fremont factory.

Musk has previously said that a Chinese factory would likely focus on Model 3 and Model Y production primarily for the local Chinese market.

The Model Y is expected to be built on the Model 3 platform to help remove complications in the manufacturing process and bring the vehicle to market faster.

Musk suggested on the call that the company would be making another factory announcement specific to Model Y production by the end of the year. He said it would be impossible to manufacture the vehicle in Fremont as the factory is “jammed to the gills.”

 

[adaptabl]

If they start importing from China. It's time for a boycott.

 

[Unpilot]

I think the factory in china makes a ton of sense for cars destined for the Chinese market.

 

[bkp_duke]

Honestly, I am 100% against Tesla establishing a factory in China.

The Chinese have shown that they have no honor with regards to intellectual property rights. They will take what they want (how to build great EVs) and Tesla will get a relatively short-lived shot in the arm financially.

 

[Barklikeadog]

Might as well flush the IP down the toilet. Once these factories are established, China will declare that environmental concerns force them to take ownership for the
good of the people. Tesla gets a big middle finger and crumby compensation. Don't do it!!

 

[jelloslug]

If they start importing from China. It's time for a boycott.

They will be built for the Chinese domestic market.

 

[larmor]

The middle class of China dwarfs the size of many countries. It is a market that cannot be missed.

I'm not familiar with IP issues with China but there are some very sharp people who I'm sure have their own innovations, etc.

 

[Barklikeadog]

They will be built for the Chinese domestic market.

Where the cars are sold doesn't matter, they would be handing over everything IP to the Chinese. They could simply take the factory
away and Tesla couldn't do a damn thing about it.

After that, Teslo cars would hit the streets.

 

[jelloslug]

Where the cars are sold doesn't matter, they would be handing over everything IP to the Chinese. They could simply take the factory
away and Tesla couldn't do a damn thing about it.

After that, Teslo cars would hit the streets.

The chances of that happening are slim considering the new rules that China is implementing for automakers. On top of that, just knowing how to assemble the car does not mean that they know how to build the car.

 

[adaptabl]

The chances of that happening are slim considering the new rules that China is implementing for automakers. On top of that, just knowing how to assemble the car does not mean that they know how to build the car.

They will get all the IP info, if they don't already have it now.

 

[jelloslug]

They will get all the IP info, if they don't already have it now.

Toyota voluntarily let GM in their factories, trained them in the Toyota Way, ran a factory side by side for years and years and GM still could not reproduce the methods that Toyota uses. Just knowing the information is not nearly enough. On top of that, the plant will be an assembly plant. The most you could hope to gain from it would be how the final car is assembled. Most of the actual parts will come in from elsewhere.

 

[adaptabl]

Toyota voluntarily let GM in their factories, trained them in the Toyota Way, ran a factory side by side for years and years and GM still could not reproduce the methods that Toyota uses. Just knowing the information is not nearly enough. On top of that, the plant will be an assembly plant. The most you could hope to gain from it would be how the final car is assembled. Most of the actual parts will come in from elsewhere.

Elsewhere in China.

 

[ItsNotAboutTheMoney]

It'll make it easier for China to steal the IP, but it won't be a JV, so they won't have the right to it.

It wouldn't affect me, since I'd want a Model 3 rather than a Model Y, but I wouldn't ever buy a car built in China (or from a Chinese-owned company), due to having built industry with protectionism. (Same for India, including Tata's Jaguar-Landrover.).

I don't blame Tesla for manufacturing there. Not only would it help them sell a bunch of BEVs in China, but potentially they'd have a bunch of Chinese credits to sell to other companies.

 

[adaptabl]

Toyota voluntarily let GM in their factories, trained them in the Toyota Way, ran a factory side by side for years and years and GM still could not reproduce the methods that Toyota uses. Just knowing the information is not nearly enough. On top of that, the plant will be an assembly plant. The most you could hope to gain from it would be how the final car is assembled. Most of the actual parts will come in from elsewhere.

From the reports of chaos in the Tesla plant. Letting China duplicate it would be good for all the other automakers.

 

[jelloslug]

From the reports of chaos in the Tesla plant. Letting China duplicate it would be good for all the other automakers.

Have you ever been in a car factory? They are all chaos. Every factory has heaps of bad cars that have to be reworked before they can be sold, malfunctioning robots, dysfunctional maintenance that lets production lines go down, and the general issue that Tesla is in the spotlight for right now.

 

[jelloslug]

And lets not ignore the 800 lb gorilla in the room: The Munro tear down of the Model 3 that is available to anyone that will fork over the cash. When they tore down the BMW i3, every single major Chinese car company bought the complete report for every system. You better believe that every single one of them has already placed their order for the Model 3 reports.

 

[Brando]

Honestly, I am 100% against Tesla establishing a factory in China.

The Chinese have shown that they have no honor with regards to intellectual property rights. They will take what they want (how to build great EVs) and Tesla will get a relatively short-lived shot in the arm financially.

too late - IP is so last century
All Our Patent Are Belong To You

 

[bkp_duke]

too late - IP is so last century
All Our Patent Are Belong To You

When I mention IP, I don't just refer to patents, but things like construction process, etc. That's not necessarily in a patent, and is still why goods manufactured in the USA are usually much better. China wants to "partner" with our companies for that know how. I'm sure the manufacturing process for the batteries coming out of GF1 is very complicated. Hence why they want to see that in action.

 

[bkp_duke]

@RobStark and @Blu Angel - if you want to disagree with my reasoning, have the balls to put forth an argument and let's all have a discussion about it.

My post above was a statement of fact (the Chinese STEAL IP, in EVERY industry that they enter), not my personal opinion.

 

[Brando]

@RobStark and @Blu Angel - if you want to disagree with my reasoning, have the balls to put forth an argument and let's all have a discussion about it.

My post above was a statement of fact (the Chinese STEAL IP, in EVERY industry that they enter), not my personal opinion.

Welcome to Wall St. and current free trade/globalization and capitalism. You are exactly right. No argument.

BUT Elon's thinking, and I completely agree, it isn't about protecting IP and patents. It IS about faster innovation than your competitors.

(and as a side note, with near 8 billion people - 100,000,000 vehicles/year it will need a minimum of 10 very large manufacturers to meet demand - Tesla can easily make a place for itself - no secrets needed, just continued great execution, continuous improvements.)