Tesla Inc. (NASDAQ:TSLA) has once again achieved a significant milestone in its bid to dominate the burgeoning electric vehicles spectacle. The EV giant is fresh from delivering its first-ever shanghaied made Model Y. The automaker has already started delivering the locally produced EV model as the race to dominate the Chinese EV marketplace heats up.
Model Y Production
It is still unclear as to the number of Model Y produced in China that Tesla delivered with the first batch. It is also unclear as to whether they were delivered to employees and retail customers. Nonetheless, it marks a significant milestone in the company’s Chinese ambitions.
China is an important market for Tesla, given the sheer size of the population as well as market acceptance of electric cars. Buoyed by strong demand, the EV giant intends to ramp up sales volume from 500,000 in 2020 to over 20 million over the next decade.
Amid the contraction in the global economy last year, China emerged as Tesla's biggest market by delivery volume. The automaker delivered 499,550 vehicles representing a 36% year over year increase. However, it was shy of the guidance of 500,000 deliveries.
China Opportunity
In a bid to enhance deliveries, Tesla began producing some of its electric cars in its $2 billion Shanghai plant. The $2 billion plants is the company’s only plant outside the U.S. Similarly, it is of great importance as it is in a big market with tremendous potential.
Producing electric cars in China is part of the automaker's plans to lower shipping costs that often eat into its margins. Chinese production should also allow the EV giant to avoid import duties or delivery delays. While Tesla is a force to reckon with, the Chinese market is not expected to be a walk in the pack.
Competition from local EV manufacturers such as Nio Inc., Li Auto, and Xpeng Motors poses the biggest threat in terms of competition. However, Tesla can lean on its advanced self-driving features and range of its electric cars to shrug off the stiff competition.
