Photo: Tesla | Edited
Tesla is looking to replicate Giga Shanghai in Mexico, including its supply chain. For this, the EV maker urged Chinese companies to establish production facilities in Mexico or risk being left behind. Sources say suppliers fear losing big orders from Tesla if they don't act promptly.
Giga Shanghai is Tesla's most successful factory, thanks to its high-efficiency processes and structure. This was its first gigafactory, and with almost 1 million vehicles per year production capacity, it is Tesla's main production hub. The EV maker designed its Chinese gigafactory in a unique way, with highly integrated production and no warehouses. Instead, trucks deliver their cargo directly to the corresponding areas of the factory around the clock.
Almost every component is produced on-site or shipped from a close distance by suppliers who set up production facilities around the gigafactory. This allowed Tesla to minimize logistic and production costs. A recent report showed that Giga Shanghai achieves a 30% gross margin, which allows Tesla to ship cars to Canada and still make a lot of money.
This is a successful recipe that Tesla tried to replicate with Giga Berlin and Giga Texas but hasn't entirely succeeded. Environmentalist protests and bureaucracy bogged down the former, while Giga Texas is held back by the low yields of the 4680 cells and the Cybertruck production delays.
Tesla doesn't want to repeat the same mistakes with its recently confirmed gigafactory in Mexico. Elon Musk has tasked his second-in-command Tom Zhu with building Giga Texas. The man behind Giga Shanghai's success story promised the Mexican gigafactory would be up and running in a record time, and we have no reason to doubt that. It appears that Zhu wants now to replicate not only the Giga Shanghai recipe but also to establish an identical supply chain in Mexico.
According to Chinese media, Tesla is urging its Chinese suppliers to establish production facilities in the country as soon as possible. Not only that, but Tesla suppliers said they felt pressed to start a business in Mexico. Many fear losing important Tesla contracts if they don't follow the recommendation and begin local production as soon as possible.
Some Tesla suppliers have already established offices in Mexico and plan for factories around Tesla's gigafactory. Xusheng Group, a producer of precision aluminum alloy parts, has a construction project already underway and production scheduled for July-August 2024. This coincides with the planned production start for the Gen-3 Tesla compact EV. Several production line equipment manufacturers have also set up offices in Mexico.
Still, some suppliers say Mexico is less mature than the European and US markets. Despite being a development hub with huge opportunities, Mexico also has relatively high social and geopolitical risks. This makes some Chinese companies wary of investing in the region, despite Tesla's ambitious plans. Giga Mexico will be the leading production site for the upcoming Gen-3 vehicles, with a planned annual production of at least 1 million EVs in the first phase. Tesla intends to expand Giga Mexico to a yearly production capacity of 2 million EVs.
Almost every component is produced on-site or shipped from a close distance by suppliers who set up production facilities around the gigafactory. This allowed Tesla to minimize logistic and production costs. A recent report showed that Giga Shanghai achieves a 30% gross margin, which allows Tesla to ship cars to Canada and still make a lot of money.
This is a successful recipe that Tesla tried to replicate with Giga Berlin and Giga Texas but hasn't entirely succeeded. Environmentalist protests and bureaucracy bogged down the former, while Giga Texas is held back by the low yields of the 4680 cells and the Cybertruck production delays.
Tesla doesn't want to repeat the same mistakes with its recently confirmed gigafactory in Mexico. Elon Musk has tasked his second-in-command Tom Zhu with building Giga Texas. The man behind Giga Shanghai's success story promised the Mexican gigafactory would be up and running in a record time, and we have no reason to doubt that. It appears that Zhu wants now to replicate not only the Giga Shanghai recipe but also to establish an identical supply chain in Mexico.
According to Chinese media, Tesla is urging its Chinese suppliers to establish production facilities in the country as soon as possible. Not only that, but Tesla suppliers said they felt pressed to start a business in Mexico. Many fear losing important Tesla contracts if they don't follow the recommendation and begin local production as soon as possible.
Some Tesla suppliers have already established offices in Mexico and plan for factories around Tesla's gigafactory. Xusheng Group, a producer of precision aluminum alloy parts, has a construction project already underway and production scheduled for July-August 2024. This coincides with the planned production start for the Gen-3 Tesla compact EV. Several production line equipment manufacturers have also set up offices in Mexico.
Still, some suppliers say Mexico is less mature than the European and US markets. Despite being a development hub with huge opportunities, Mexico also has relatively high social and geopolitical risks. This makes some Chinese companies wary of investing in the region, despite Tesla's ambitious plans. Giga Mexico will be the leading production site for the upcoming Gen-3 vehicles, with a planned annual production of at least 1 million EVs in the first phase. Tesla intends to expand Giga Mexico to a yearly production capacity of 2 million EVs.
Tesla suppliers in ???????? are reportedly urged by Tesla to build factories in Mexico ASAP. According to an anonymous insider, suppliers feel they may lose big orders from Tesla if they don’t act in a timely manner. If the report is true, it makes perfect sense to have suppliers right… pic.twitter.com/fbyIeIHoah
— Ray (@ray4tesla) June 8, 2023
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