Tesla earned USD 1.47 billion in revenue in the first half of this year in China, up 41.8% year-on-year, the company said in a filing with the United States Securities and Exchange Commission on Monday.
Behind this sales growth was the introduction of the US-manufactured Model 3 into China in the first quarter this year. Model 3 is a fully electric sedan meant for the mass market. Tesla booked USD 1.76 billion in China revenue in 2018, down from USD 2.03 billion in 2017, as sales of premium models were negatively affected by increased import duties on components sourced from China, as well as by tariffs on vehicles exported to China in that year due to the trade war between China and the US.
China is the world’s largest EV market, and Tesla has plans to capitalize on that by building a manufacturing facility in Shanghai.
“In particular, we expect our planned production at Gigafactory Shanghai, which will facilitate our ability to offer Model 3 in China at competitive local pricing, will drive further demand and opportunity,” said Tesla in the filing, adding that production at this plant could start by the end of this year.
Although Tesla admits that “some competitors have also announced plans to compete with us in important and large markets for electric vehicles, such as China,” the market still holds promise with multiple advantages, such as its improving infrastructure for EV charging. Inadequate charging service has been a headache for EV owners and has weighed down EV sales.
While Tesla’s own supercharging services, which are located mainly in major cities, are insufficient in serving EVs that are currently on the road, the country’s charging facilities are expanding quickly, with more and more companies entering the sector to function as charging station operators.
At the end of June, China had more than 1 million charging poles, which makes it the world’s largest EV charging network, People’s Daily reported last week, citing data from National Energy Administration.