Tesla China Factory 65% Less Expensive Than US Model 3 Production Line

The Tesla China factory was built in 10 months and is 65% less expensive (capex per unit of capacity) than the US Model 3 production lines.

Tesla is extending its lead and advantages over other car makers. Tesla is leading with batteries and is adding other design, technology (less wiring, better batteries) and other advantages. Tesla also does not have to spend on advertising to sell out all of the cars they are building.

Tesla China clearly benefited from the lower labor costs and vast construction capabilities in China. However, they also have made design improvements in the car, improved the factory design and improved the machines used in their factory.

The body of the Model 3 can be stamped in one part instead of 75 parts.

The wiring has been reduced from 3000 meters in the Model S to 1500 meters in the Model 3 and will be 100 meters in the Model Y.

It will be interesting to see what the factory efficiency and costs will be for the German Gigafactory and the next US Gigafactory. They will not have the lower China labor costs but they will have continued improvement in vehicle, factory and production equipment. In particular, the Maxwell Technology battery innovations will only need 6% of the factory space for the equivalent level of battery production.

Tesla Also Has About a $1000-4000 Per Car Cost Advantage Because They Do Not Have to Spend on Advertising

Regular car makers spend about $1000 per car on advertising. Luxury cars tend to spend $2000-4000 per car in advertising. Porsche has had a strong following and only spends $200 per car on advertising. Tesla does not spend on advertising and is able to sell all the cars that they are able to make. The Tesla Model X and Model S are in the pricing range of the lower luxury market.

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