A week after CEO Elon Musk reaffirmed that Tesla (TSLA) would turn profitable by the next quarter, the electric car maker is fast-tracking the pre-launch preparations for its ambitious China plant. The company has started hiring employees for the $2-billion Gigafactory being set up in Shanghai, which according to some analysts will be the key to the cash-strapped company’s survival in future.
Tesla’s full-fledged expansion to China is widely seen as a timely move considering the heavy tariffs announced by the Asian giant on auto exports from the US and the growing demand for the company’s popular car models in that country.
The latest announcement complements Musk’s post-earnings assurance last week that the days of negative cash flow are over for Tesla, easing the concerns of investors and Tesla-watchers about the company’s long-term sustainability. However, all that the market knows about the investment required for the China plant is that Musk intends to arrange the fund from local lenders.
The company has started hiring employees for the $2-billion Gigafactory being set up in Shanghai
According to sources, Tesla last week put out a recruitment message on the social media seeking engineers and machinists for the upcoming facility in Shanghai. Likening Gigafactory-3 to Dreadnought, the path-breaking British warship built in the last century, the statement said, “we are recruiting the first batch of sailors and looking forward to having you on board soon.”
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The target is to roll out 250,000 vehicles from the new facility per year initially and to double the capacity in future to cater to the fastest growing electric vehicle market in the world. If everything goes as planned, the first China-made Tesla cars will hit the road in three years. For Musk, achieving the production goals is crucial to fulfilling his dream of developing Tesla into the most significant player in the sector.
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Even though China is Tesla’s second largest market, it will not be a cakewalk for the company to expand its market share in the region which has been witnessing an influx of foreign carmakers like Volkswagen and BMW, setting the stage for fierce competition in the local market. Tesla will also have to compete with the many startups trying their luck in the electric vehicle sphere.
Tesla shares closed the last trading session down 2% and gained slightly in the early trading hours Tuesday.