Tesla President Robyn Denholm defends manufacturing investment in China

With more than 21.5 million new passenger cars sold in 2021, China is by far the largest automotive market in the world, and all players in the automotive industry have manufacturing plants there.

Tesla is no exception and its investments in the Giga Shanghai assembly complex are paying off, as China is by far Tesla’s largest overseas sales market. Despite this, the electric vehicle maker constantly has to explain why it cares so much about China, especially now that China-US relations are not at their best and the two countries are engaged in strategic competition.

During a visit to Australia, Tesla President Robyn Denholm was asked about the company’s focus on China and its plans to expand further there. Bloomberg reports that she defended Tesla’s commitment to China by saying that reaching the goal of making 20 million vehicles a year by 2030 will require manufacturing capabilities on every continent.

“We are building factories all over the world. Our view is that the world is moving towards electric vehicles and lithium-ion batteries and we need to be in all major markets around the world.”

Tesla has set a goal of building 20 million electric cars a year by 2030, up from just under 1 million produced in 2021. The Shanghai upgrade alone has doubled the annual capacity of the factory to about 1 million units.

In his speech to the National Press Club in Canberra on September 14, Denholm further explained why Tesla’s strategy to build vehicles on all continents is important when it comes to reducing vehicle distribution costs.

“Producing vehicles on continents is important because, again, when you’re defining a long-term supply chain, you want the miles those cars travel before someone owns them to be as short as possible, and that includes shipping and ocean freight because all of these processes contribute to CO2 emissions.”

She added that having manufacturing capacity on each of the continents is important because of the global markets which are really important.

Tesla’s operations in China are back in full swing after a production line upgrade and after the Covid-19 lockdown in Shanghai earlier this year slowed production. The automaker delivered 76,965 Chinese-made vehicles in August, nearly matching June’s record of 78,906.

Marjorie N. McClure