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Tesla says it will start making Model 3s at its upcoming factory in China faster than expected

Tesla's factory in Fremont, California.
Tesla's factory in Fremont, California. Tesla

  • Tesla will start making Model 3 sedans at its upcoming factory in Shanghai by the end of 2019, the automaker said on Wednesday.
  • Tesla had previously said parts of Model 3 production would begin in China before the end of 2019, but the automaker's fourth-quarter earnings letter indicates that it has become more optimistic about the early stages of production at the Shanghai factory.
  • "By the end of this year we are expecting to start producing Model 3 vehicles at our Gigafactory Shanghai using a complete vehicle production line," Tesla said. "In the initial phase of Gigafactory Shanghai, we expect to have stamping, paint shop, body joining, and general assembly shops in operation by the end of 2019."

Tesla will start making Model 3 sedans at its upcoming factory in Shanghai by the end of 2019, the automaker said on Wednesday.

Tesla had previously said parts of Model 3 production would begin in China before the end of 2019, but the automaker's fourth-quarter earnings letter indicates that it has become more optimistic about the early stages of production at the Shanghai factory.

"By the end of this year we are expecting to start producing Model 3 vehicles at our Gigafactory Shanghai using a complete vehicle production line," Tesla said. "In the initial phase of Gigafactory Shanghai, we expect to have stamping, paint shop, body joining, and general assembly shops in operation by the end of 2019."

Read more: Tesla misses on earnings, says it will produce the Model 3 at 'maximum production rates'

The automaker said its revised expectations are due to what it says will be a "radical simplification" of its production process at the Shanghai factory compared to its current vehicle production plant in Fremont, California. Tesla had struggled to ramp up production of the Model 3 during the second half of 2017 and in early 2018 before hitting a long-delayed goal of making 5,000 Model 3 vehicles in one week at the end of June.

In addition to increased production efficiencies, Tesla said the costs of building production capacity at Shanghai factory will be less than half of the costs of building its Model 3 production line at the Fremont factory.

Tesla aims to begin by making 3,000 Model 3s per week at the Shanghai factory, with a long-term goal of producing 10,000 vehicles per week at the factory. Production at the Shanghai factory will not include high-end versions of the Model 3 like the long-range, all-wheel-drive and performance trims.

Construction of the Shanghai factory began in January. The factory will allow Tesla to avoid tariffs and shipping costs when delivering vehicles to Chinese customers.

Tesla on Wednesday announced its earnings from the fourth quarter of 2018. The automaker posted adjusted earnings of $1.93 per share on revenue of $7.23 billion. Wall Street analysts had expected adjusted earnings of $2.10 per share on revenue of $7.1 billion.

Have a Tesla news tip? Contact this reporter at mmatousek@businessinsider.com.

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