Tesla's Latest Round of Expansion Started in December

Recently, the environmental information platform of Shanghai enterprises and institutions shows that Tesla has publicized the environmental impact assessment of the production line optimization project in the second phase of the Shanghai Super factory (Phase I). The EIA report shows that the total investment of the production line optimization project is as high as 1.2 billion RMB. It is expected to start construction in December 2021 and be completed in April next year. The production line optimization project is mainly for the expansion of stamping workshops, body workshops, painting workshops, final assembly workshops and logistics operation centers. After the expansion is complete, Tesla in China intends to increase the plant's capacity from 1 million to 1.5 million vehicles per year.
 
According to the latest news from foreign media, the location of Tesla's US super factory has been officially finalized, and it will be in Austin, Texas. 1.06 billion US dollars (about 6.77 billion RMB) was invested to build the factory. It covers a total area of 8.09 square kilometers, which is Tesla's largest production base to date and Tesla's fifth super factory in the world. The factory will be used to produce electric pickup trucks.
 
According to the data, Tesla's supply chain is dominated by Chinese, North American, Japanese, and Taiwanese companies. Among them, Chinese component suppliers have lower costs, faster R&D and response capabilities, and advantages in international competition. At present, more than 40 listed companies in China have directly or indirectly supplied Tesla with metal parts, electrical and electronic systems, interior and exterior decorations. At present, most of the batteries and components of the Berlin factory rely on exports from China. Chinese companies that have succeeded in the Tesla system have grown rapidly with Tesla on the one hand, and on the other hand, they have also gained first-mover advantages in electrification.
 
In October, 40,666 domestically produced Tesla vehicles were exported, creating a new record for exports in a single month, mainly because the Shanghai factory assumed the task of supplying the European market. Since 2021, nearly 150,000 domestic Tesla cars have been exported. In the third-quarter financial report, Tesla said the Shanghai super factory had a potential annual capacity of more than 450,000 Model 3 and Model Y vehicles, while the Fremont factory had an annual capacity of 600,000 vehicles.
 
As the vane of the new energy vehicle industry, Tesla's re-sales and production expansion also show that the new energy vehicle industry still has room for substantial growth. Tesla's Shanghai super factory will be able to achieve the goal of producing 500,000 vehicles per year this year. The production efficiency is very high, and more than 90% of the supply chain has been localized. Tesla has also played a positive role in promoting the growth of local parts companies. With the help of Tesla's global layout, it can also drive these supply chain companies to improve their international competitiveness to a certain extent. The auto parts companies that are most closely related to it developed, such as Xusheng shares, Joyson Electronics and so on.
 
As a global Tier 1 supplier of Tesla, Xusheng Co., Ltd, its products cover all models sold by Tesla. Tesla's further expansion of production will greatly increase the company's order. In the first three quarters of 2021, the company achieved revenue of 2.012 billion RMB, with a year-on-year increase of 82.10%; net profit of 332 million RMB is gained, with a year-on-year increase of 43.67%; deducted non-net profit is 314 million RMB with a year-on-year increase of 46.07%. While introducing advanced technologies, the company has simultaneously developed and formed core technologies such as friction stir welding for auto parts, battery system shells for new energy vehicles, transmission boxes for new energy vehicles and assembly production, which improves the production capacity and quality and makes company's products continue to meet the requirements of the downstream customers.
 
According to the data from the Passenger Federation, China's production and sales for new energy vehicles reached a new high in October, with a year-on-year growth of over 130%; from the beginning of 2021 to September, China's new energy vehicle sales were 2.157 million, with a year-on-year increase of 193.9%. It has maintained a positive month-on-month growth since April. And from January to October this year, its penetration rate has exceeded 14%, and it is expected to exceed 20% next year.
 
According to data from the China Business Industry Research Institute, from 2016 to 2020, the sales revenue of auto parts in China increased from 3.46 trillion RMB to 4.57 trillion RMB, with an average annual compound growth rate of 7.2%. Under this trend, it is expected that China's sales revenue of auto parts will reach 4.9 trillion RMB in 2021, and the parts industry will maintain an expansion trend.