Indian Tesla Model 3’s possible production site to make the Model Y

The Tesla Gigafactory in Shanghai can roll out 2,50,000 units of the Tesla Model 3 a year. From next year, Tesla plans to manufacture the Tesla Model Y (the crossover equivalent of the Model 3) at this plant.

In the Tesla Q3 2020 investor update document, the company shared a photo of the paint shop at the Tesla Gigafactory Shanghai. A Model Y can be seen in the paint shop, which indicates that the company is already conducting production trials. Tesla Gigafactory Shanghai updates could be directly linked to the Tesla India launch, with initial imports possibly from the Chinese plant.

“Model Y (made in Shanghai) cost should be roughly equivalent to the Model 3 built in Fremont costs,” Elon Musk, co-founder & CEO, Tesla, told analysts during the Q3 2020 results conference call.

Tesla Model 3 front three quarter view
Improvements to the 2021 Tesla Model 3 include better range and performance, and a powered tailgate.

With Tesla India’s order configurator set to go online from around January 2021, as indicated by Elon Musk, CEO, Tesla, there comes an important question: Will the first lot of the Tesla Model 3, which already has pre-orders from India, come from USA or China?

The Tesla Model 3, along with the Model Y, is expected to be the front-runner for the brand, as it is in other countries. In the United States, the Tesla electric car starts at USD 40,000 (INR 30 lakhs), and with local assembly in India, we expect prices to be in the INR 45-50 lakhs bracket, where rivals come in the form of the combustion engine BMW 3 Series and Mercedes C Class, or the upcoming Volvo XC40 Recharge electric SUV.

Even if Tesla India opts for local assembly, the knocked-down kits would have to come from Tesla Gigafactory Shanghai or Tesla Gigafactory Fremont, USA. There are some indications that Gigafactory Shanghai would be the facility making India-bound Model 3s, either as completed units, or in kits.

Tesla Gigafactory Shanghai will begin exports of the Tesla Model 3 to European countries including Switzerland, France, Italy and Germany starting this month, and exports to Asian countries and Australia and New Zealand are expected to commence shortly. Note that Tesla has not confirmed the sourcing location for the India-bound model, but every electric vehicle in India today has a Chinese connection with respect to the battery cells, power electronics or the motor. The two important Indian electric vehicles launches in 2020 – Tata Nexon EV (battery and motor) & Bajaj Chetak (battery) – get their core electrical components from China.

Further, the Model 3 made in Shanghai uses a less expensive LFP (Lithium Iron Phosphate) battery as compared to NMC (Nickel Manganese Cobalt) batteries on the made-in-USA model. The latter is more expensive, but has a higher energy density. Interestingly though, the LFP Model 3 features a higher range of 468 km as compared to the NMC’s 445 km (NEDC testing cycle) as per information from China’s Ministry of Industry and IT. The cheaper LFP has resulted in a USD 3,000 (INR 2.2 lakh) price cut to the Model 3, making it more accessible for Asian consumers.

Top view of the Tesla Model 3
If priced in the INR 45-50 lakh range, the Tesla Model 3 will look appealing to BMW 3 Series and Mercedes C Class buyers.

Earlier this month, a refreshed Tesla Model 3 was introduced to American customers, which includes a new ‘chrome-delete’ option (replacing certain chrome panels on the exterior for body color parts), a powered liftgate/trunk, a different design for the center console (which now gets a sliding retractable door as compared to the older folding one) and improvements to range and performance.

The Model 3 Standard Range gets a bump from 400 km to 420 km, the Model 3 Long Range from 515 km to 564 km, and Model 3 Performance from 478 km to 504 km (all EPA ratings). The 2021 Model 3 LR shaves 0.2 seconds in its 0-100 km/h sprint (4.2 seconds) and the 2021 Model 3 Performance saves 0.1 second (3.2 seconds).

By the time Indian deliveries commence, we think it is the ‘refreshed’ 2021 Tesla Model 3 that customers will get, that too mostly made in Shanghai using the LFP battery. We will update this story when more details are available.