Tesla To Build 500,000 Cars Per Year in Shanghai China!

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Holy smoke is the new cycle that never ends witches tesla motors has come out with some unbelievably big news here today so we’re going to look at this from tesla’s standpoint why does tesla want to make a move like this well it’s going to look at it from china’s perspective why does china want this to happen is it good is it bad who’s it good for on both sides so

We’re gonna go super in-depth so the news is that tesla plans china factory that can make 500,000 vehicles a year okay this is monstrous news 500,000 vehicles a year so let’s assume they could do actually 500,000 vehicles per year let’s assume the average vehicle cost somewhere around $40,000 which it’s probably on the low side but we’ll just do that number there

Will be around 20 billion dollars of revenue per year that they could produce out of this factory okay if this is a success and they’re talking about getting this done pretty soon so we’re gonna look at all the the factors behind it now you might think this wood moves tesla stock in a massive way today right tesla’s gonna have a huge day no not really actually

Tesla stock was only up about 1.3 percent around $4 per share today up more than the market certainly but i wasn’t like yeah this was some huge day for tesla stock i think part of the reason is elon must actually leaked a little bit this information back in the shareholder meeting i don’t i think he kind of did it by accident but he leaked some of the information

At that time it wasn’t all the specifics around it but i think that’s one of the reasons why tesla did not move up in a big way also i think there’s still a lot of bearish talk out there around tesla stock so that’s probably another reason why tesla stock did not move up in a big huge way today so let’s look at some of this behind here okay guys tesla has reached

A preliminary agreement with the shanghai government to build a factory that would rival productions from its lone us assembly plant as elon musk takes the biggest step yet to expand overseas the electric car makers play in capacity for the factory is 500,000 vehicles a year the shanghai government said in the statement bloomberg reported earlier that must tesla’s

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Chief executive would be in the city for an event with the government on tuesday youngest publicly held us automakers looking to expand its capacity and more efficiently to reach global markets tesla’s low core assembly plant is in fremont california and the company has a giant battery factory here in nevada it’s out in sparks nevada okay after moving ahead in

China the world’s largest market for electric vehicles tesla has said it plans to reveal plans to build a big factory in europe next maybe they could announce plans within probably the end of this year must said in may 2016 that he expects tesla to produce 500,000 vehicles in fremont by 2018 obviously the company has fallen under those numbers so just because you

Know they say well we can start doing five hundred thousand vehicles maybe eventually one day they can get there but just you know let’s say they get this factory up and running let’s say in 20 late 2020 or early 2021 doesn’t mean that right away necessarily they’ll already be hitting five hundred thousand we know must you know puts out these big numbers and they

Don’t always meet so it could take several years for them to get production to those type of numbers so don’t get too excited too soon tesla said in a year ago it was working with the shanghai government to explore local manufacturing since then production in china has become even more crucial last week in response to tariffs imposed by the united states china

Increased the import duty on us made cars by 40 percent prompting tesla to raise prices a plane in china would also reduce shipping costs and could make sourcing components more economical tesla’s boosted prices of his model s sedans and model x crossovers in china by as much as $30,000 after beijing imposed the additional duties on american built autos putting

Tesla vehicles beyond the reach of most consumers in the market alright guys that’s a that’s a hefty move there okay so eon must he meets here with the shanghai mayor and this is a really exciting moment for two reasons for china it’s almost obvious on why tesla would want to make a move like this it works for tesla in a huge way right they get to avoid the import

Duties which you know they’ve had it raised by $30,000 on model s and model x that puts it out of you know most people’s brackets i mean unless you’re super rich like you can’t afford a model s or a model exit you know crossover like it’s just so unrealistic they’re already expensive vehicles then you raise the price by 30,000 plus dollars unless you’re you know

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Very very wealthy in china you cannot afford one of those cars because we’re talking about these are–these are bumping up against 150,000 plus dollars at that point in time so from from tesla standpoint if they want to be a mass-market producer of vehicles in china obviously they want to go ahead and be over in china so they can avoid those those tariffs and then

Also on top of that the shipping costs and sourcing components and obviously chinese labor is much cheaper over there so it makes perfect sense for test so why they’d want to make a move like this right but i think the more important thing is kind of why does china want to make a move like this well there are two reasons why china would be interested in this one

It’s going to make electric cars more affordable we know tesla has massive demand ton of chinese consumers want tesla’s i mean the tesla’s revenue in china like well over doubled last year so tons of chinese consumers want tesla’s and china has an initiative to expand production of electric cars in their country okay so making it more affordable makes sense okay so

Definitely from china standpoint that’s a big part of it also a big chinese company one of the darlings of china one of the biggest chinese companies out there has an actual ownership stake in tests okay they bought over 5% tesla shares last year all right we’re talking about two billion dollars where the tesla shares this company homes all right and there’s also

Some talk about alibaba may be interested in buying an ownership stake in tesla as well as baidu so as of right now one of china’s darlings $0.10 already has a big ownership stake in tesla so definitely the chinese government is in a position where they there’s many reasons why they want tesla to succeed rather than just you know trying to mass-produce now there

Could still be the the worry out there about you know could the chinese government or not directly the chinese government but basically chinese companies steal some of the ip and whatnot behind tesla and go ahead and you know produce their own cars that’s still a bigger possibility when you are over in china and you actually have a factory over there and whatnot


And everything’s easier to get to your suppliers easy to get to all that type of stuff that could certainly still be a worry but i would say it’s less of a worry when i think about it from the perspective this isn’t a joint venture so this is a tesla factory that’s just for tesla okay it’s not like they’re doing a partnership with somebody and then think about

It from the perspective of you know the darling of china has a huge ownership stake in this company and really china is going to want them to succeed because they want to push electric cars more than gasoline cars we know pollution is already insane in china last thing they want is a you know a billion you know diesel cars out there are a billion gasoline run cars

They don’t want something that pollution is already bad enough so it definitely makes sense i think it’s a great move for for china i think it’s a great move for tesla it should be interesting to see how it all plays out i believe tesla will probably have to you know it sounds like they’re gonna end up going the debt route and basically raising debt to go ahead

And build that factory you should be much cheaper to build it over there in china than it would be to you know build something on this scale in america let’s put it that way because obviously the workers make much less over in china so it’s gonna be really fun to see how this all plays out i would love to hear from you guys in that comment section how you think

Is gonna play out do you think it’s a great move for tesla bad move for tesla great move for china bad move for china i would love to hear you guys opinion down there in that comment section as always links to all my stuff is down there in the description my my instagram account snapchat all that type of stuff any premium courses you want to check out all that is

Linked down there in the description thank you for watch and have a great day

Transcribed from video
Tesla To Build 500,000 Cars Per Year in Shanghai China! By Financial Education

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