On the last day of the May Day holiday, a piece of information about Shanghai's auto industry has once again boosted expectations about the city's auto industry.
According to foreign media reports, Tesla revealed in a thank-you letter to the Shanghai Special Administrative Region on May 1 that tesla will build a new factory on land near the same area as the Shanghai factory, which is expected to increase its annual capacity by 450,000 vehicles and become "the world's largest auto export center."
Tesla's peak annual production capacity in Shanghai is expected to reach 1 million vehicles when combined with previous factory capacity.
Tesla officials and Shanghai's Lingang New Area have not responded to requests for comment.
Tesla plans to start building a new factory in Shanghai as soon as next month near its existing production base in Lingang, Pudong New Area, foreign media reported on February 24, citing people familiar with the matter. "Once the new plant is fully operational, Tesla's expanded factory in Shanghai, its main export hub, will have the capacity to produce up to two million vehicles per year."
But tesla insiders were quick to deny it. Given this information, it may not have been the new Shanghai plant that was denied, but a capacity of 2m vehicles a year.
It has long been known that Tesla will build a fifth gigafactory this year, but the current capacity is far from CEO Elon Musk's goal for his electric car business. Under his plan, Tesla would need to build another 10-12 gigafactories.
That is why much attention is being paid to the location of its fifth gigafactory, especially in China.
In 2021, Tesla's Shanghai Gigafactory delivered 484,13 vehicles for the whole year, double the production in 2020 and more than half of Tesla's global production (tesla delivered about 936,000 vehicles worldwide in 2021). Tesla's Shanghai plant is designed to produce just 450,000 cars a year, with a capacity utilization rate of over 107%.

In the first quarter of this year, Tesla's cumulative sales exceeded 180,000, reaching 182,174 vehicles, according to China auto sales data released by the Association. If all force majeure factors are excluded, this figure is expected to break through 700,000 vehicles for the whole year.
In March this year, the epidemic returned to China and many places had to go into a quiet period, including Tesla's Shanghai Gigafactory, which further extended the delivery period of its new cars to 3-4 months. With no cars to sell, the price of tesla's used cars has skyrocketed, with some charging up to 7,500 yuan more than new ones.
Although tesla's Shanghai Gigafactory has resumed production in an orderly manner, it is inevitable to expand capacity to meet the demand of the rapidly growing market in the future.
For this reason, the news that Tesla will build a new factory in Shanghai aroused a lot of cheers from people inside and outside China, as if the site of tesla's second factory in China has been confirmed.
It is worth noting that as early as last November, Tesla disclosed that the production line optimization project of The Second phase of The Shanghai Gigafactory (Phase I) had a total investment of 1.2 billion YUAN and was expected to start construction in December last year and be completed in April this year when conducting eia publicity and soliciting public opinions. When completed, the expansion is expected to create 4,000 jobs and produce more than 1 million vehicles a year, making it the world's largest electric vehicle factory.
For this reason, some argue that "production line expansion" might be more appropriate than calling it Tesla's second Factory in China.
Nobel Prize-winning economist James Tobin once put forward an easy to understand investment principle -- do not put all eggs in one basket, the same applies to the investment layout of the automobile industry.
As mentioned above, the domestic automobile industry is under pressure in supply chain, production, logistics, transportation and other links due to the repeated epidemic this year. Most automobile enterprises are affected in production and delivery, especially in the Automobile industry cluster in The Yangtze River Delta centered in Shanghai. Tesla's Gigafactory in Shanghai suffered its longest shutdown since it opened in 2019, with production losses of more than 50,000 vehicles.
Some people in the industry believe that after this epidemic, The site selection of Tesla's second factory may give priority to non-Yangtze River Delta region, thus minimizing the risk gathering.
Wang Xianbin, a senior analyst at Gaishi Automotive Research Institute, thinks there are three logical points for tesla to choose the site of the second factory:
Firstly, the auto industry should be developed in the region where the selected city is located. The auto industry cluster has been formed, and the supply chain has obvious advantages to promote the allocation of 100% locally made parts.
Second, it is close to the port, which is convenient for domestic models to be exported overseas, especially to The European and North American markets.
Third, the policy support and service intensity of local government is large, and the conditions of land, credit funds, government approval and other related fields should be similar to those of Shanghai Lingang factory.
In the past year, several Cities in China, such as Guangzhou, Shenzhen, Qingdao, Dalian, Tianjin, Wuhan, Ningbo and Shenyang, have indirectly or directly participated in the tug of war for Tesla's second plant, but they have all been directly or indirectly denied by the relevant person in charge of Tesla.
For this reason, it seems more appropriate to load capacity on Shanghai by expanding existing plants than in other regions.
After all, since tesla's Shanghai Gigafactory was put into operation, the localization rate of electric vehicles produced by tesla has reached nearly 100%. Around the Shanghai factory, Tesla has formed a relatively complete supply chain layout in the Yangtze River Delta region, commonly known as "4-hour circle of friends". Depending on the existing "circle of friends", its expansion and production efficiency may be greatly improved.
At the same time, as the tesla to thank-you note mentioned in Shanghai lingang government, thanks to return to work and production factory in Shanghai lingang government support, saying that a company of lingang group will arrange bus 6000 tesla and supplier shipped to factory workers, and carry out the company to enter the "closed-loop" required to produce the disinfection work. "They've been working around the clock for three days to make sure our workers can get back to the plant."
The strength of local government policy support and services, or tesla is another big factor weighing on Shanghai. As other regions scramble for Tesla's second factory in China, Shanghai's Lingang New Area will not pass up the opportunity.