Lyla Lindsey
Tesla's Australian manufacturing operations have been a topic of interest for industry observers, with reports indicating that the company has shifted production of its Model 3 and Model Y vehicles for the Australian market to China. This move has sparked discussions about potential price adjustments and the impact on EV prices in Australia, which have historically been high. While Tesla has not confirmed the shipment, it is worth exploring the implications of this shift and whether it will lead to a price reduction for Australian consumers.
| Characteristics | Values |
|---|---|
| Place of manufacture | Giga Shanghai factory in China |
| Models | Model 3, Model Y |
| Production capacity | 250,000 cars annually |
| Production capacity by end of 2020 | 500,000 cars annually |
| Battery chemistry | LFP (iron phosphate) |
| Range | 508 km of NEDC-rated range |
| Door panel trim | Updated design similar to the Model Y |
| Price of Standard Range Plus Model 3 in China | 271,500 yuan ($A54,653) |
| Price of Standard Range Plus Model 3 in Australia | $72,000 |
| Price of Long Range Model 3 in Australia | $89,600 |
| Price of Performance Model 3 in Australia | $106,000 |
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What You'll Learn
Tesla Model 3s sold in Australia are made in China
Tesla Model 3s sold in Australia are now made in China, specifically in Tesla's Giga Shanghai factory. This shift in production from the Fremont factory in the United States to China was rumoured as early as 2020, but it was only confirmed in February 2021.
The change in sourcing for the Australian market was expected to kick in with all new MY21 models. This move is part of Tesla's strategy to reduce the wait time for customers ordering cars from its Fremont, California plant. The Shanghai factory has a production capacity of 250,000 cars annually, with plans to expand to 500,000 units per annum by the end of 2020.
The Chinese-made Tesla Model 3s have some differences from the US-made models. One of the most notable differences is the use of a LFP battery chemistry, which is less energy dense but cheaper to produce. As a result, the range of the Chinese Model 3 is slightly higher at 508 km compared to the US version's 490 km. Additionally, the Chinese Model 3 features a door panel trim similar to the Model Y, and it is expected to be more affordable. However, as of December 2023, there has been no confirmation of a price reduction for Australian buyers, despite price cuts in other markets.
While some customers may have concerns about the political implications of buying an electric car manufactured in China, others believe that the quality of Chinese-made Teslas will be just as good, if not better. With Tesla's focus on efficiency and sustainability, the company is comfortable with using the lower density LFP battery in the China-made Model 3.
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Tesla's Shanghai factory
In 2021, the Tesla Model 3 was sent to Australia from the Gigafactory Shanghai, Tesla's first factory abroad. This marked a shift from the original Tesla factory in Fremont, California, from where the Model 3 was previously sourced.
The Gigafactory Shanghai was established as a wholly-owned subsidiary of Tesla, with Tesla CEO Elon Musk signing an agreement with the Shanghai regional government in July 2018. Notably, Tesla does not own the land the factory is built on, as is typical in China, but has been granted land use rights for an initial term of 50 years. The project received significant financial support from the Chinese banks and the local Shanghai government, who offered a reduced corporate income tax rate.
The construction of the factory progressed rapidly, with the groundbreaking ceremony held in January 2019 and production beginning in November of the same year. The site is located in the Lingang Industrial Zone within the Pudong district of Shanghai, bordering the Fengxian district.
The Gigafactory Shanghai produces the Model 3 and Model Y, with a planned annual capacity of 500,000 electric vehicles. However, Tesla's deliveries in China have been facing a decline, impacted by factors such as Chinese buyers' preferences for domestic brands and competition from other automakers. To counter this, Tesla has been emphasizing that its vehicles are 'Made in China' and offering discounted rates.
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Differences between US-made and Chinese-made models
While Tesla cars made in the US and China may look identical, there are some differences between the two models. The most notable difference is in the batteries they use. Chinese Model 3s use lithium-iron phosphate (LFP) batteries, while US-made models use lithium nickel cobalt aluminium oxide (NCA) batteries. This difference in batteries also results in a difference in range, with the Chinese model offering a slightly longer range of up to 417km, compared to 381km for the US model.
Another difference is in the weight of the vehicles. The Chinese-made Model 3 is heavier, adding 119kg to the US-made model. This additional weight may have a slight impact on acceleration, but during road tests, there was very little to separate the two models in terms of performance. In fact, the Chinese model even accelerated from a standstill with a fraction more enthusiasm.
There have also been reports of differences in build quality between the two models. Some users have reported issues with panel gaps, paint, and alignment in US-made models, while Chinese-made models have been described as having perfect alignments and paint jobs. However, it is important to note that not all users have experienced these issues, and some have reported having no problems with their US-made Teslas.
In terms of feature availability, there have been reports of discrepancies between the Chinese and US-made Model 3s. However, it is unclear whether these discrepancies are due to regional variations or other factors.
Overall, while there are some differences between the US-made and Chinese-made Tesla models, both offer high performance and quality. The choice between the two may depend on factors such as price, availability, and personal preference.
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The future of Tesla's Australian prices
Tesla has not made any official statements regarding the future prices of its Australian models. However, there has been speculation about price changes due to the shift in production location from the United States to China.
In 2020, Tesla's CEO and co-founder Elon Musk stated that the Shanghai Giga factory would produce "affordable versions of 3/Y for greater China." This statement suggested that the vehicles manufactured in this factory would be more affordable than those produced in the United States. Additionally, Musk highlighted improvements in efficiency, such as the use of a heat pump in the China-made Model 3, which contributed to Tesla's comfort in utilizing a lower-density LFP battery.
The shift to the Shanghai factory is expected to reduce logistical and manufacturing expenses, and the use of lower-cost batteries may further drive a reduction in prices for Australian customers. In October 2020, the base model SR+ price was cut to $66,900 (before on-roads), which was a slight decrease from the previous price of $73,900. However, it should be noted that this price is still higher than the launch price of $66,000 in August 2019.
While there is anticipation for price reductions, it is important to consider that Tesla has not adjusted prices with the shift from California to China manufacturing for the Model 3. As of 2021, the prices for the Model 3 in Australia start at about $72,000 for the Standard Range Plus, $89,600 for the Long Range, and $106,000 for the Performance, with slight variations depending on location.
Tesla's online configurator has not indicated any price adjustments, and the company's decision to shut down its PR department has made it challenging to obtain official responses. Despite the lack of confirmation, there is still a possibility of future price changes, as seen in other markets like Europe, Asia, and the United States, where prices for the Model 3 were reduced recently.
In summary, while there is no concrete information from Tesla, the combination of reduced production costs in China and the previous price adjustments in other markets suggests that Australian Tesla prices may experience a downward trend in the future. However, it remains uncertain whether these potential savings will be passed on to local buyers, and customers await official confirmation from the company.
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Tesla's Fremont factory in California
The Fremont Factory has been a hub for Tesla's production, including models like the Model S, Model 3, Model X, and Model Y. In 2011, Tesla transitioned to "beta builds," producing 50 vehicles entirely at the Fremont Factory for system integration, engineering testing, and federal certification. By 2012, the first retail delivery of the Model S took place at the factory, marking a significant milestone for the company.
Tesla's approach to production at the Fremont Factory is notable for its focus on innovation and sustainability. They develop new processes using a first principles approach, enabling them to build some of the most advanced vehicles globally. Additionally, the company prioritizes renewable energy in its factory design, aiming to reduce the environmental impact of electric vehicle ownership.
The Fremont Factory has also been a centre for employment and economic activity. California awarded Tesla $15 million in tax credits if specific employment and investment goals were met. Furthermore, the presence of the factory has attracted suppliers to the area, creating a cluster of related businesses. For instance, Tesla's dashboard supplier, SAS, rents a building near the factory, and other suppliers like Eclipse Automation and Futuris Automotive Group have established facilities nearby.
While Tesla has expanded its manufacturing footprint, including the Giga Shanghai factory in China, the Fremont Factory remains an essential part of the company's operations and continues to produce advanced vehicles that contribute to the transition to sustainable energy.
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Frequently asked questions
Australian Teslas are made in China.
Model 3 and Model Y Teslas are made in China.
Tesla's Shanghai factory opened at the end of 2019.
The company aimed to cut the wait time for customers ordering cars from its Fremont, California plant.
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