Tesla starts flooding Canadian EV market with China-made cars (2024)
Tesla is starting to flood the Canadian EV market with China-made electric cars, which are cheaper and could change the market.
When first announcing plans to build cars in China, CEO Elon Musk clearly stated that it would only be to satisfy local demand and that Tesla wouldn’t export vehicles from China. That changed after Gigafactory Shanghai quickly surged to become Tesla’s most productive plant and the world’s largest electric vehicle factory.
At the time, many suspected that the new lower-range version would be built using LFP battery cells, like Tesla’s base Model 3. It could mean that the whole car could have been made at Tesla Gigafactory Shanghai in China.
Now the vehicles have started to show up on Tesla’s new inventory vehicle website, and the VIN confirm that they are coming from China:
These vehicles are already in Canada. Those are just the first vehicles being added to the company’s inventory from the first ship from China to Canada.
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They are doing this to chase the incentives like they always do. They are prioritizing US cars for US buyers who qualify for the incentives in the US. By most accounts the Shanghai cars are of higher build quality than Fremont because they are using the newer production process that Tesla has yet to implement in Fremont (Highland might change this soon!) so there might be some benefit to the Canadian customer as well. The Austin cars are an even newer production process but that one has yet to work out all the bugs but they are getting there - when it does they should be even higher quality than Shanghai.
But according to vessel tracking data (via Tesla Carriers on Twitter), Tesla has shipped another large number of cars from China to Canada due in the coming weeks.
According to info from local Chinese media, Tesla is looking to ship as many as 10,000 vehicles from China to North America this quarter. All these vehicles are likely going to go to Canada since buyers won’t get access to the federal tax credit in the US if the vehicles come from China.
This is a massive number of vehicles, considering only about 30,000 all-electric vehicles get delivered in the country every quarter.
Considering the new Model Y made in China is eligible for the $5,000 federal incentive in Canada, the vehicle could have an important impact if it is available in high volume in the country.
Reuters reported back in May that Tesla had begun listing China-made Model 3 and Model Y vehicles for sale in Canada, “confirming the electric car maker has completed its first shipments to North America from its Shanghai factory.”
Tesla's factory on the outskirts of Shanghai makes cars both for the domestic market and for export. Some of the production lines at Tesla's Shanghai plant, including the battery workshops, are subject to longer suspensions, one of the people said.
While Tesla does not break down sales by country, data from the China Passenger Car Association (CPCA) showed its Shanghai Gigafactory delivered 220,876 vehicles in the first quarter, which makes up more than 57% of all deliveries during that period. It marked a 4% decrease compared to the same period last year.
China's EV price war flares up again after Tesla drops the cost of some models to the lowest point in 5 years. Tesla's market share in China shrunk to 6.7% in the last quarter of 2023, down from 10.5% in the first quarter of that year.
While Tesla owns the factory, it does not own the land it is built on, as is typical in China. The government granted Tesla land use rights with an initial term of 50 years.
The Chinese-built Y features a lithium-iron phosphate (LFP) battery that gives an EPA-rated driving range of 245 miles (394 km), whereas the entry-level U.S. Model Y with rear-wheel drive has a more powerful battery and can travel 279 miles (449 km) before needing a fill, according to the EPA.
A few years earlier, with Tesla on the brink of failure, he had bet on China, which offered cheap parts and capable workers — and which needed Tesla as an anchor to jump-start its fledgling electric vehicle industry. For Chinese leaders, the prize was a Tesla factory on domestic soil.
“In China, BYD has created a strong product lineup that is better attuned to that market, and have been willing to compete on price more than Tesla in the past,” says Greg Silverman, global director of brand economics at Interbrand. “Excess supply, limited demand, and a strong competitor means Tesla suffers in China.”
Tesla Inc. has reduced vehicle prices in China amidst stiff competition. Tesla had earlier introduced incentives in China to attract consumers, countering competition from BYD. Musk meanwhile deferred his India visit, which was aimed to tap into a new market amid declining sales and stock prices.
Tesla reported that first-quarter revenue was $21.3 billion, down 9% from last year as worldwide sales dropped nearly 9% due to increased competition and slowing demand for electric vehicles.
BEIJING — BYD produced more than 3 million new energy vehicles in 2023, surpassing Tesla 's production for a second straight year. Tesla said Tuesday it produced 1.84 million cars in 2023. Most of BYD's cars sell in a lower price range than Tesla's, and come in hybrid versions in addition to battery-only powered cars.
China's BYD has outpaced Tesla to become the world's largest producer of pure-electric vehicles, with a 22 per cent increase in global fourth-quarter sales, surpassing Tesla by 41,000 units. The surge is fuelled by rising EV demand in China, where 40 per cent of vehicles sold are electric.
Elon Musk's Tesla has been overtaken by its Chinese rival, BYD, as the world's top selling electric carmaker. BYD, which has been backed by the US investment billionaire Warren Buffett since 2008, has beaten Tesla's production for a second consecutive year.
The Shanghai factory currently mainly produces Model 3 and Model Y. The latest Model 3 Highland version is produced in the Shanghai factory. The Model 3 and Model Y produced at the same time are not only sold in China but also supplied to Europe.
Markham, a Canadian high-tech hub and home to many corporate headquarters including Tesla's just a couple of miles away in neighboring Richmond Hill, has among the highest concentration of electric vehicle usage in the country, so it was a natural fit for the new facility.
Tesla's Shanghai plant, its biggest globally, is capable of producing 1.1 million units of Model 3 and Model Y cars a year and besides China also supplies countries such as New Zealand, Australia and Europe.
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