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Tesla’s Shanghai Gigafactory Revs Up

Tesla is preparing to upgrade its Gigafactory in Shanghai to produce 21,000 electric vehicles per week.

The upgrade will run from July to August, and is intended to increase Tesla’s weekly output of its Model Y SUV and Model 3 sedan by 5,000 and 2,200 respectively. Vehicles produced at Shanghai will be exported to other Asian markets, Oceania, and Europe, meeting a market demand of over 1 million electric vehicles per year.

Video Spotlight:  

This post is based on the electrek article, Tesla prepares to upgrade Gigafactory Shanghai to produce 21,000 EVs per week, by Fred Lambert, June 24, 2022; the electrek article, Tesla (TSLA) reports massive increase in production capacity across all factories, by Fred Lambert, July 20, 2022; and the YouTube videos in the Spotlight. Image source: joeppoulssen/123RF

Discussion Questions:

1.  How does demand forecasting inform Tesla’s decision to increase the production capacity at its factory in Shanghai?

Guidance: Tesla predicted that demand for its electric vehicles in the Asian markets, Oceania, and Europe will be over 1 million per year.  Its current production capacity is only half a million per year.  An upgrade to its Shanghai factory is needed to provide a production capacity that matches forecasted demand.

2. What capacity planning considerations are related to Tesla’s decision to upgrade its factory in Shanghai?

Guidance: One capacity planning consideration is product demand, i.e., how many vehicles of which model are needed in markets served by its Shanghai facility. Another is production capacity, i.e., what kind of capacity is needed, how much is needed, and when it is needed at its Shanghai facility.  Since product demand exceeds its current capacity, Tesla decided to upgrade its Shanghai facility to increase its production capacity to match demand.

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