Inside Tesla's New Shanghai Gigafactory

Summary

Tesla's Gigafactory 3 in Shanghai is a testament to China's shift towards foreign investment, being the first fully foreign-owned car plant in the country. It's a symbol of Tesla's global expansion and China's manufacturing prowess, with a production target of 550,000 vehicles annually. The factory, which employs a blend of human and robotic labor, has already begun exporting vehicles, reflecting improved build quality. CEO Elon Musk views it as a 'template for future growth,' with plans to duplicate its success in other continents.

Takeaways

• 🚗 Tesla's Gigafactory 3 in Shanghai is the first fully foreign-owned factory in China, marking a shift in the country's stance on foreign imports.
• 💡 The factory was completed in a record time of just over a year, half the time it took to build Tesla's Nevada factory.
• 🤖 Giga 3 employs a hybrid workforce of humans and robots, with robots handling most of the heavy work and humans performing tasks that machines can't replicate.
• 🌍 The Shanghai factory produces Model 3 and Model Y vehicles, with most cars sold in China and a small portion exported globally.
• 🔄 Tesla uses a lean manufacturing model to improve efficiency, reducing waste by ensuring parts arrive exactly when needed.
• 📊 The factory is equipped with advanced AI and machine learning systems to continuously improve precision and reduce errors.
• 🛠 Workers and robots work in harmony on the production line, with staff closely monitoring robot-only areas via sensors and cameras.
• 🚛 The facility has a large network of roads and truck ports, allowing for the smooth transport of finished cars to customers or other destinations.
• 📈 Tesla's collaboration with Chinese officials has led to lower production costs and faster factory expansion, with plans to acquire more land nearby.
• 🔧 The 'Made in China' Model 3 features improved build quality, better sound insulation, and special Chinese character badges for local buyers.

Q & A

What makes Tesla’s Giga 3 in Shanghai historically significant?

Tesla's Giga 3 is the first fully foreign-owned factory in China, marking a significant shift in the country's attitude towards foreign investment and imports.

What steps did Tesla take to secure the land for Giga 3?

Tesla secured an 86-acre plot of land in a 50-year agreement at a cost of 973 million yuan (approximately $150 million USD) in July 2018.

How does the timeline for building Giga 3 compare to Tesla’s Nevada factory?

Giga 3 was completed in half the time it took to build the Nevada factory, with construction finishing by the end of Summer 2019, while the Nevada factory took around two years to complete.

What are the production goals for Giga 3 in terms of vehicle output?

Giga 3 aims to produce 300,000 Model 3s and 250,000 Model Ys annually, with 80% of the cars intended for the Chinese market and the rest for export.

How does Tesla implement lean manufacturing at Giga 3?

Tesla uses 'lean manufacturing,' a model inspired by Toyota, where parts arrive just in time for assembly, reducing waste and increasing efficiency.

What role does artificial intelligence (AI) play in Giga 3’s production process?

AI supports production by detecting and rectifying mistakes, with machine learning improving the system’s accuracy and efficiency over time.

How has Tesla balanced human and machine labor at Giga 3?

Tesla employs a hybrid workforce where robots handle repetitive tasks, while humans perform more complex operations, ensuring a high level of quality control at every stage.

How does Giga 3 accommodate large-scale deliveries and shipments?

Giga 3 features tens of truck ports that allow multiple deliveries and collections to happen simultaneously, enhancing logistical efficiency.

What improvements have been made to the Made in China Model 3?

The Made in China Model 3 has seen enhancements in sound insulation, sealing, and overall build quality, benefiting from China’s strong manufacturing capabilities.

How does Giga 3 support Tesla’s long-term global strategy?

Giga 3 serves as a 'template for future growth,' with Tesla planning to replicate its successful blueprint for expansion in other gigafactories around the world.

Outlines

00:00

🚗 Tesla's Strategic Entry into China with Giga 3

Tesla's decision to build its third Gigafactory in China, known as Giga 3, marked a pivotal shift in the country’s stance towards foreign companies. The Chinese government, usually strict with import regulations, made an exception for Tesla. Giga 3 was completed faster than any of Tesla’s other factories, becoming the first fully foreign-owned factory in China. Despite the impact of the COVID-19 pandemic, the factory was reopened swiftly, demonstrating China's cooperation. The plant produces 300,000 Model 3s and 250,000 Model Ys annually, meeting China's massive electric vehicle (EV) market demand.

05:04

🏭 Building Giga 3: From Barren Land to Factory

Giga 3 is located 90 minutes outside of Shanghai on what was once a barren plot. Securing the 86-acre site in 2018 for approximately $150 million, Tesla transformed it in record time. By Summer 2019, construction was completed, and by December, the first ‘Made in China’ Model 3 was produced. The factory’s impressive efficiency is showcased by its use of lean manufacturing, a process inspired by Toyota, which helps reduce waste and increase productivity. The factory efficiently combines robotic precision with human oversight, demonstrating a harmonious blend of human and machine labor.

🤖 Inside Giga 3: Robots and Humans Working Together

Inside Giga 3, robots and humans work side by side on the assembly line to maintain quality and efficiency. Robots perform heavy-duty tasks while humans handle work that requires flexibility and critical thinking. The factory layout is carefully designed to streamline the manufacturing process, allowing trucks to deliver parts just in time for production. Advanced AI and machine learning continuously improve processes, while workers ensure quality control in areas where machines cannot function alone. Tesla employs 2,000 workers at Giga 3, with shifts strategically planned to avoid interrupting production.

🚘 Testing and Shipping Tesla’s Made in China Cars

Once assembly is completed, each car undergoes a thorough testing process. Workers boot the infotainment system into factory mode to ensure all functions, including lights, media, and drive systems, are operational. Externally, parts like wheels and charging ports are inspected. Tesla's organized road network outside the factory facilitates the transportation of cars to storage before delivery. Drone footage shows vast parking lots filled with Model 3s, waiting to be shipped. The 860,000 square meter site allows Tesla to scale operations significantly, with room for future expansion.

📈 Giga 3's Role in Tesla’s Global Growth Strategy

Giga 3 is a key component of Tesla’s plan for global expansion. The factory’s large output potential could one day produce over a million cars annually, highlighting Elon Musk’s ambitions for the site. Its construction cost, ranging from $2-5 billion, reflects Tesla’s long-term investment. Even during the COVID-19 pandemic, Giga 3 continued to grow, with rumors suggesting Tesla plans to acquire additional land nearby. The Chinese government’s support, including loans and subsidies, has helped reduce production costs, making Giga 3 a model for future Tesla factories around the world.

🇨🇳 China as a Vital Market for Tesla’s Future

Tesla's strong collaboration with Chinese officials has been a key factor in Giga 3’s success. By using locally sourced materials and leveraging China’s expertise in manufacturing, Tesla has been able to cut costs and improve the quality of its vehicles. The Made in China Model 3 has earned praise for its refined build, with better sound insulation and quality compared to other models. Tesla’s future growth depends on its continued success in China, which includes plans for a research and development center focused on Chinese consumer preferences, potentially introducing new, long-wheelbase models tailored to the market.

🔄 Tesla’s Hybrid Workforce and Global Replication

Giga 3’s success lies in its hybrid workforce of humans and machines, resulting in faster production and higher quality vehicles. Tesla’s blueprint for the Shanghai factory is set to be replicated worldwide, simplifying the expansion of new factories. The company’s commitment to cost-cutting and customer satisfaction has paid off, with Chinese operations being a template for growth. The Made in China Model 3 has already been exported to Europe, and Elon Musk believes that lessons learned from Giga 3 will shape Tesla’s future manufacturing strategies globally.

Keywords

💡Gigafactory 3

Gigafactory 3 refers to Tesla’s third large-scale manufacturing facility located in Shanghai, China. It is significant because it marks the first fully foreign-owned factory in China, representing a shift in the country's attitude toward foreign investment and manufacturing. The factory plays a critical role in Tesla’s global strategy to produce and distribute electric vehicles (EVs) more efficiently.

💡Lean manufacturing

Lean manufacturing is a production model focused on reducing waste and maximizing efficiency. In the context of Gigafactory 3, this approach is used to synchronize the arrival of parts at the factory in a just-in-time fashion, reducing excess inventory and lowering costs. The term emphasizes Tesla’s strategy to streamline production, thereby increasing profitability and output speed.

💡Model 3

The Model 3 is one of Tesla’s most popular electric vehicles, and it is a key product being manufactured at Gigafactory 3. The script highlights that the first 'Made in China' Model 3 was produced in December 2019, symbolizing Tesla's growing footprint in the Chinese automotive market. This model is destined for both domestic Chinese consumers and international markets.

💡Chinese government

The Chinese government is portrayed as a pivotal partner in Tesla’s success in China. It has provided approvals, loans, and logistical support to Tesla, even during the COVID-19 pandemic. The government’s involvement is crucial to understanding how Tesla was able to establish its Shanghai factory and benefit from favorable policies that enhance production and reduce costs.

💡Automation and robotics

Automation and robotics are integral to the production processes at Gigafactory 3, where machines perform much of the labor. The factory showcases a harmonious interaction between humans and robots, with machines handling repetitive tasks while humans supervise and manage areas that require manual input. This blend of human and automated labor is key to Tesla’s efficiency.

💡Coronavirus pandemic

The coronavirus pandemic had a temporary disruptive impact on Tesla’s operations, including Gigafactory 3. However, the Chinese government played a crucial role in reopening the factory by organizing transport and accommodation for workers, as well as distributing PPE. This demonstrates how the pandemic affected global businesses and how local government support was essential for Tesla's resilience.

💡Tesla’s expansion

Tesla’s expansion refers to the company's growing global footprint, with Gigafactory 3 in Shanghai being a key part of that strategy. The factory’s rapid construction and potential for future growth reflect Elon Musk’s vision of scaling up Tesla’s production capabilities to meet global demand for electric vehicles. There are rumors of Tesla acquiring adjacent land to further increase the factory's capacity.

💡Chinese market

The Chinese market is the largest automotive market in the world, with a rapidly growing demand for electric vehicles (EVs). Tesla’s decision to set up Gigafactory 3 in Shanghai is directly related to the importance of this market. The script highlights that most of the vehicles produced at Gigafactory 3 will serve Chinese consumers, underlining the strategic significance of penetrating this market.

💡Hybrid workforce

A hybrid workforce in this context refers to the combination of human labor and machine automation working together in Gigafactory 3. While robots handle precision tasks, humans perform roles that require oversight and decision-making. This collaborative approach is portrayed as one of the reasons for Tesla’s improved production efficiency and build quality.

💡Research and development (R&D) center

The research and development center is a planned addition to Tesla’s operations in China, focused on developing products tailored to Chinese consumers. The center would likely explore customer preferences, such as a potential demand for long-wheelbase vehicles, highlighting Tesla’s commitment to localizing its product development for the unique characteristics of different markets.

Highlights

Tesla's Gigafactory 3 in Shanghai is the first fully foreign-owned factory in China, marking a change in China's import policy.

Gigafactory 3 was built on an 86-acre plot, secured through a 50-year agreement in 2018, costing $150 million.

The construction of the factory was completed in half the time compared to Tesla's Nevada factory, finishing by Summer 2019.

The first 'Made in China' Tesla Model 3 rolled off the production line in December 2019.

Gigafactory 3 is designed to produce 300,000 Model 3s and 250,000 Model Ys annually, primarily for China's market, the largest car market in the world.

Tesla's lean manufacturing system, based on Toyota’s model, allows just-in-time part deliveries, reducing waste and increasing efficiency.

Advanced robotics, AI, and human labor work in harmony on the factory floor, ensuring precision and quality control in production.

Tesla employs 2,000 workers who manage shifts and perform tasks that machines cannot replicate.

Drone footage shows Tesla's parking lots filled with hundreds of finished Model 3 cars, awaiting transportation to customers.

The factory's expansion potential is significant, with room to grow operations beyond its current boundaries.

Elon Musk believes that Gigafactory 3 could eventually produce over 1 million cars annually, far surpassing the initial target.

Tesla has received Chinese government support, including loans and assistance, particularly during the COVID-19 pandemic.

Tesla's commitment to using locally sourced products helps the company cut costs and reinvest in further development.

The 'Made in China' Model 3s have been exported to Europe and received positive reviews for their improved build quality and refined driving experience.

Tesla plans to establish a research and development center in China to focus on the local market and customer preferences.

Transcripts

What happens when China, one of the world’s most fiercely competitive manufacturing countries,

goes up against Tesla, an American super-company devoted to revolutionising the way we think

about personal transportation?

While the Chinese government is renowned for imposing strict import regulations on other

countries and companies, its deal with Tesla hits just that little bit more different.

The company’s third Gigafactory is the result, but what lies within?

Join us on this adventure 90 minutes’ drive outside of Shanghai’s city centre to a once

barren plot of wasteland.

Giga 3 is big news, not only for Tesla, but in Chinese, and global, history.

Upon completion, it became the first fully foreign-owned factory in China, marking the

country’s change in attitude towards imports, further testified by the government’s involvement

in re-opening the facility’s doors following a temporary ban on all business at the start

of the coronavirus pandemic, including the distribution of PPE and the organisation of

transport to and from the site, as well as accommodation for workers.

Before we open the doors on what’s inside, let’s first get to grips on how Musk and

his team transformed this plot of land.

The first step was to secure the 86-acre plot of land in a 50-year agreement at the cost

of 973 million yuan, approximately $150 USD, in July 2018.

By the end of Summer 2019, all building work had been completed in a timeframe half that

of the Nevada factory, which took around 2 years from start to finish.

After a few more months of moving machinery in, the first ‘Made in China’ Model 3

rolled off the production line in December 2019 in its non-standard blue colour.

Tasked with eventually producing 300,000 Model 3s and 250,000 Model Ys from its Shanghai

factory, Tesla will export only one fifth, with the rest destined for customers in the

world’s largest car market.

Of the 21 million cars sold in China in 2019, between 1 and 1.5 million were EVs.

The first look we had of the factory was in a YouTube video posted by Tesla China themselves,

consisting of less than 50 seconds of shots of the assembly line, including robotic arms

many times the size of the human body, as well as harmonious work between robots and

humans.

Recent tours of the Shanghai-based manufacturing plant compare with what we know of the company’s

first-born, the Fremont factory based in California.

Videos of Giga 3 show tens upon tens of truck ports which allow for multiple deliveries

and collections to take place simultaneously.

This type of timed manufacturing based on a Toyota model known as ‘lean manufacturing’

means that the right parts arrive at the right time, making the process both cheaper and

more efficient by minimising waste and maximising productivity.

Inside the four walls, machines do the hard work while humans perform the tasks that cannot

be replicated by machinery.

Both work in harmony, often on the same production line, to ensure that quality is delivered

at every step.

Robot-only areas are strictly monitored by the staff, who occupy miniature booths inside

the building with windows and viewing platforms to overlook their area of responsibility,

while cameras cover areas that cannot be seen by the naked eye.

An array of sensors and sophisticated machinery is backed up by intense programming and machine

learning - any mistake will be rectified, making the artificial intelligence stronger

day by day.

While Musk emphasises the importance of technology for the company for cost-saving purposes and

precision that cannot be matched by the human eye, the factory continues to employ around

2,000 workers who stagger their shift patterns throughout the day.

Workers travel on vast, open corridors and networks of internal paths, which are strategically

and carefully positioned so as not to disrupt the assembly line’s flow.

Timelapse footage shows the cars moving down the line while humans and machines interject

at varying stages to complete the work.

Upon completion, it’s time for testing.

This is when the car’s infotainment system is booted into factory mode, allowing workers

to test all of the cars’ functions such as headlights, media control and drive systems.

Moving parts like the wheels and charging ports are also inspected at this stage.

Just like inside, a network of roads forms the area just outside the factory, used not

only by truck drivers, but also to transport the assembled Teslas to their final place

of resting on the site.

The parking lot.

Drone footage shows hundreds of spaces, filled over numerous days, full of Made in China

Model 3s awaiting transportation to their customers.

A space so vast, at over 860,000 square metres, is vital for the company to be able to ship

such numbers of finished components and goods.

Videos of the site show it to be an oasis in the middle of barren wasteland.

While this may not be overly pleasing to the eye, it means one thing for sure.

If needed, there is room for the company to expand operations and to outgrow the assembly

process outside of the current four walls.

CEO Elon Musk believes that one day Giga 3 alone could produce more than 1 million cars

each year.

To put that in perspective, America’s best-selling car, the Ford F-Series, is estimated ot have

been sold around 40 million times in a life spanning 73 years.

The total cost of the Shanghai factory is estimated to be between $2-5 billion, however

the figure is hard to place firmly because the site is under constant expansion.

Despite the virus’ impact on all businesses worldwide, early 2021 saw rumours surface

about Tesla’s plans to acquire a 114-acre plot of land adjacent to the existing site.

While Musk’s company wasn’t directly named, we knew that a ‘new energy vehicle manufacturer’

had plans to use the land.

We also knew that Musk had plans to outgrow the site.

The rapid growth of Giga 3 can’t give credit entirely to Tesla’s huge global success,

though.

Elon Musk has been working closely with Chinese officials in a mission that has truly paid

off, with the company gaining approvals and permissions, and even loans and support such

as those offered during the pandemic.

These have helped the company cut the cost for the production of the Made in China Model

3, which as well as going on somewhat to benefit the customer, also allows the company to reinvest

and develop quicker.

This, along with the company’s commitment to use locally sources products for all of

its factories, will help Tesla turn a higher profit and secure its place in the future

of personal transportation, and the wider automotive industry.

The Chinese operations have since been dubbed as a “template for future growth” by CEO

Elon Musk, who will duplicate everything that works well in the factory to future factories

in other continents.

In fact, the success of Giga 3 can be measured and quantified in its Made in China Model

3, which has been exported to many European countries as well as the Chinese mainland.

Owners and reviewers have testified to improved build quality, which could be linked to the

country’s expansive experience in manufacturing which has been shoehorned into Giga 3.

Furthermore, the plant has enhanced the sound insulation and sealing in the Model 3 to help

create a more refined, relaxed drive.

With an improvement in quality and a strong foothold in the door, Tesla’s future seems

reliant on China for both exploring manufacturing and exploiting new customers.

This is why, according to rumours, a research and development centre is set to be established

in the country to focus on Chinese customers, who are notably different to those in Europe

and the US.

China, for example, has previously been a fan of long-wheelbase saloons, which begs

the question whether the automaker will introduce such a Model there?

MIC Model 3s destined for Chinese ownership get one tiny hardware upgrade - Chinese characters

placed on the left of the trunk which are there to represent the sound translation of

‘Tesla.’

The English ‘Model 3’ badge remains unchanged on the right hand side.

In summary, Giga 3’s hybrid workforce of human and machine has resulted in improved

quality and faster production.

The company’s blueprint approach means expansion needn’t be complicated, and can even be

duplicated for future gigafactories around the world.

Cutting costs and improving customer satisfaction can only be a good thing, but we’re keen

to find out whether it has all worked out this way.

Have you received your Made in China Model 3, or maybe you’re able to share information

on your US-built Model?

Whatever your scenario, let us know what you think in the comments section below.