As the first wholly foreign-owned vehicle manufacturing enterprise in China, Tesla's rapid development is also a vivid reflection of China's high-level openness.
As a "full-time student", Tesla participated in the China International Import Expo for the sixth time this year (hereinafter referred to as the "Import Expo"). Tesla Global Vice President Tao Lin stated in an interview with 21st Century Economic Report reporters that CIIE is a world-class trade event. For enterprises, CIIE is not only a display platform, but also a platform for communication, interaction, and cooperation negotiations. Leading enterprises from various industries around the world gather here for technological exchange and cooperation, breaking down information barriers, which is crucial for promoting industrial upgrading.
This year marks the 45th anniversary of China's reform and opening up, as well as the 10th anniversary of Tesla's entry into China. China is not only an important consumer market for Tesla, but also an important research and development innovation and production base. Tao Lin stated that the importance of the Chinese market is unique. China's continuous opening-up policy, advanced development concepts, and favorable business environment have created huge opportunities. The Chinese market is a "must have option" for Tesla, and she hopes to continue to deeply cultivate the Chinese market.
The Tesla Shanghai Super Factory is a vivid portrayal. In January 2019, Tesla's Shanghai Super Factory began construction, and in December of that year, the first complete vehicle was taken off the production line, creating "Tesla Speed" and "China Speed" that year, which were "started, completed, put into production, and launched". On September 6th of this year, Tesla's Shanghai Super Factory launched its second million vehicles, setting a new record for the Shanghai factory: it took 33 months to achieve the goal of 1 million vehicles for the first time, while this time it only took 13 months to go from 1 million to 2 million vehicles. The Shanghai factory has become the most efficient super factory in Tesla's history.
On a larger scale, China's automotive industry is thriving. According to data from the General Administration of Customs, in the first half of this year, China replaced Japan as the largest exporter of automobiles, exporting 2.34 million vehicles, an increase of 76.9% year-on-year. Among them, 795000 new energy vehicles were exported, an increase of 112.7% year-on-year. Tesla's Shanghai super factory also exports complete vehicles to multiple countries and regions in Asia Pacific and Europe. In addition, according to data from the China Automobile Association, in 2022, the annual production and sales of new energy vehicles in China reached 7.058 million and 6.887 million, respectively, with year-on-year growth of 96.9% and 93.4%, and a market share of 25.6%.
Tao Lin is optimistic about the prospects of China's new energy vehicle market: on the one hand, it is the trend for electric vehicles to replace fuel vehicles; On the other hand, current Chinese consumers have become increasingly rational, with clear standards and ideas when choosing electric vehicles. Only by continuously strengthening product strength can we truly win users.
The Chinese market is a 'must have' option
21st century: As a "full-time student", Tesla participated in the CIIE for the sixth time this year. What do you think the CIIE will do for the development of enterprises and international cooperation?
Tao Lin: CIIE is a world-class trade event. For enterprises, CIIE is not only a display platform, but also a platform for communication, interaction, and cooperation negotiations. Leading enterprises from various industries around the world gather here for technological exchange and cooperation, breaking down information barriers, which is crucial for promoting industrial upgrading and building a new development pattern of "dual circulation".
The theme of the Tesla exhibition area at this year's CIIE is "Ten Years of Entering China, Benchmarking Smart Manufacturing". This year marks the tenth anniversary of Tesla's entry into China. Over the past decade, we have not only achieved vigorous development in the Chinese market, but also brought the product power of Chinese smart manufacturing to the global market. In our view, the shared future of the new era and the beautiful future of mobile travel are both green and environmentally friendly, as well as sustainable development. As a brand that has participated in six consecutive exhibitions, in addition to bringing the latest S3XY series of models, Tesla's charging and energy products such as super charging piles, Cybervault, home charging piles, Solar Roof, Powerwall, Megapack, and humanoid robots also made their debut at the expo.
Tesla's mission is to accelerate the world's transition to sustainable energy. As of now, Tesla has delivered a total of 5 million electric vehicles worldwide, with approximately 1.5 million owners in China. A Tesla electric vehicle can reduce 55 tons of carbon dioxide equivalent emissions during its lifecycle. In 2022, Tesla's global customers reduced greenhouse gas emissions by 13.4 million metric tons of carbon dioxide equivalent.
21st century: This year marks the 45th anniversary of China's reform and opening up, as well as the 10th anniversary of Tesla's entry into China. China is not only an important consumer market for Tesla, but also an important research and development innovation and production base. What is the significance of the Chinese market for Tesla? What are your expectations for future development?
Tao Lin: The importance of the Chinese market is unique. China's continuous opening-up policy, advanced development concepts, and favorable business environment have created huge opportunities for us. China has always been an extremely important market for Tesla. Tesla's development in China over the past decade cannot be separated from strong support from national policies and China's emphasis on the business environment. China has unparalleled advantages and broad prospects in other global markets, and the Chinese market is Tesla's "must choose". We hope to continue to deeply cultivate the Chinese market, provide better products to consumers, and drive the common development and prosperity of the supply chain and industry.
Accelerating the world's transition to sustainable energy is Tesla's vision, and China will be an indispensable part. I believe that in all fields, China will become another global center for Tesla.
Optimistic Prospects for China's New Energy Vehicle Market
21st century: According to data from the China Automobile Association, in 2022, the annual production and sales of new energy vehicles in China reached 7.058 million and 6.887 million, respectively, with year-on-year growth of 96.9% and 93.4%, and a market share of 25.6%. What is the prospect of China's new energy vehicle industry?
Tao Lin: China's new energy vehicle industry is developing rapidly. Seven departments including the Ministry of Industry and Information Technology have issued the "Work Plan for Stable Growth in the Automotive Industry (2023-2024)". The annual car sales target for 2023 is 27 million, with a new energy vehicle target of 9 million, an increase of 30%. Relevant departments have launched measures such as "supporting the expansion of new energy vehicle consumption", "ensuring the stability and smoothness of the industrial chain supply chain", and "improving infrastructure construction and operation".
We are optimistic about the prospects of new energy vehicles in China. On the one hand, it is the trend for electric vehicles to replace gasoline powered vehicles; On the other hand, Chinese consumers have become increasingly rational when choosing electric vehicles. They have very clear standards and ideas, and only by continuously strengthening their product capabilities can they truly win users.
China's Intelligent Manufacturing Accelerates World Energy Transformation
21st Century: On October 25, 2021, Tesla Shanghai R&D Innovation Center and Shanghai Super Factory Data Center were officially completed. What does these two 'hearts' mean to Tesla? What is the current development situation?
Tao Lin: In October 2021, Tesla's first overseas R&D center with the goal of vehicle development, the Shanghai R&D Innovation Center, was officially completed in Lingang. Its dozens of laboratories focus on research and development of vehicles, charging equipment, and energy products, which has greatly improved Tesla's research capabilities in China. At this center, Tesla can conduct independent research and development targeting the Chinese market. At the same time, Tesla can also directly communicate with China's advanced technology and R&D talents, which undoubtedly helps to enhance Tesla's competitiveness in the global market.
Many of the improvements to the new version of Model 3 have come from Tesla's Shanghai R&D Innovation Center. For example, the increased quietness of the entire vehicle, the all-new embracing cockpit, the all-new interior materials, and the long-awaited ventilation function of the front seats by Chinese users are all technical achievements repeatedly tested and continuously optimized by Tesla Shanghai R&D Innovation Center in different laboratories.
Originated in China and serving the world, the Shanghai R&D Innovation Center has applied multiple achievements to global products. At present, the Shanghai R&D Innovation Center is focusing on recruiting and cultivating relevant talents. In the future, Tesla Shanghai R&D Innovation Center will grow into a comprehensive R&D center of the same size as North American R&D centers, allowing "China Smart Manufacturing" to accelerate the world energy transformation.
Data security is not only the responsibility of an enterprise, but also the cornerstone of the development of the entire industry. Tesla has established a Shanghai Super Factory data center to store data generated by Chinese business and customer personal information, achieving localization of data storage. All data generated by the sales of vehicles in the Chinese Mainland market will be stored in China. After the government regulatory authorities jointly released the "Several Regulations on Automotive Data Security Management (Trial)" in October 2021, Tesla, as one of the first pilot enterprises, actively participated in the compliance pilot work organized by the regulatory authorities. Data security has always been one of our focuses, and we will continue to strive to better protect the privacy and data security of car owners.
How to reduce costs?
21st Century: Tesla's Shanghai Super Factory has introduced integrated die-casting technology, and the technology is also continuing to improve. The development prospects of this technology are still broad? Will costs be further reduced and research and development efficiency be improved in the future?
Tao Lin: The 6000 ton die-casting machine used by Tesla's Shanghai Super Factory greatly simplifies the connection process of the Model Y model's rear bottom plate in the welding process, greatly reducing the welding points and adhesive amount of the vehicle body. The rear bottom plate, which originally required more than 70 parts to be welded, is formed by one-time die-casting. The manufacturing time has been reduced from 1-2 hours in traditional processes to 3-5 minutes, significantly reducing the demand for production lines and infrastructure, simplifying production processes, and shortening production time. Production efficiency has been significantly improved. The integrated die-casting process has triggered a technological revolution in car body manufacturing. After Tesla, many companies have followed closely and started to follow up on the layout and planning application of integrated die-casting technology.
As an important global export center for Tesla, the Shanghai super factory is also Tesla's first factory outside the United States, which has extremely important strategic significance for Tesla to deeply cultivate the Chinese and global markets. Tesla's financial report for the third quarter of 2023 shows that the actual annual production capacity of the Shanghai Super Factory has increased from 750000 vehicles/year in the second quarter to over 950000 vehicles/year in the third quarter. At present, Shanghai Super Factory has achieved over 95% localization of components, and the automation rate has reached over 95%. It can take over 30 seconds to offline a car. Recently, the 2 millionth Chinese made Tesla vehicle and the 5 millionth Tesla vehicle globally were successively taken offline at the Shanghai Super Factory.
21st Century: In addition to the application of integrated die-casting technology, what other methods have Tesla Shanghai Super Factory used to reduce costs? Improve production efficiency?
Tao Lin: The efficient production and lean manufacturing of Shanghai's super factory also benefit from the following aspects. One is the scientific factory design layout, with Shanghai Super Factory carrying out long-term and scientific planning and design at the beginning of construction. The Shanghai Super Factory adopts a linear design, significantly reducing the number of ups, downs, and turns, and eliminating redundant buffer zone design, greatly improving manufacturing efficiency. The design of a double-layer factory building in the workshop greatly improves the efficiency of space utilization; Several production and manufacturing processes are integrated together, and both the flat area and three-dimensional space can be efficiently utilized.
Automated production lines have also greatly improved Tesla's production efficiency. Traditional production lines, which used to require thousands of people to complete, now require only a few dozen people to complete their work. For example, in Tesla's welding workshop, the automation rate has approached 100%.
Tesla has established a unique Warehouse On Wheel logistics system, saving almost all storage space through mobile container warehouses. Tesla did not build warehouses in the workshop or factory area, replacing fixed warehouses with mobile warehouses. Trucks transport containers filled with materials to the workshop, directly unloading them onto the "docks" carved out outside the workshop, and then transporting other materials.
The automated management system has also played a role, and Tesla's automated production lines and intelligent production processes have greatly improved production efficiency. For example, thousands of logistics vehicles shuttle back and forth within the factory every day, and Tesla is also planning vehicle routes through a sophisticated electronic management system. At the same time, Tesla adopts a vertically integrated production model, independently developing and manufacturing core components such as batteries, motors, and electronic controls, thereby achieving autonomous and controllable vehicle production. This highly integrated production method makes factory operations more efficient and significantly shortens production cycles.
Embrace a carbon neutral future
21st Century: Under the global wave of carbon neutrality, how does Tesla's Shanghai Super Factory implement the concept of sustainable production? What are the ways to build a green factory?
Tao Lin: Like other global factories at Tesla, while pursuing efficiency, Shanghai Super Factory adheres to energy conservation and emission reduction, aiming to become a model of "green factory" and implement environmental protection in every production process. In the 2022 Shanghai Economic and Information Technology Commission and Shanghai Development and Reform Commission jointly organized the "Shanghai 2022 Green Manufacturing Demonstration List" selection, Tesla Shanghai Super Factory was awarded the title of "Five Star Green Factory", and Tesla is also the only complete vehicle company on the "Five Star Factory" list.
93% of the waste generated during the production process of the Shanghai Super Factory is recycled, reducing greenhouse gas emissions by 30% and water consumption by 15% during the single car manufacturing process. The industrial water recycling rate is as high as 98%, and over 400000 tons of reclaimed water can be recovered annually. The discharged wastewater does not contain heavy metals to avoid environmental pollution caused by heavy metals. The Shanghai Super Factory has also been continuously improving green processes to reduce exhaust emissions. Since the material selection stage, Shanghai Super Factory has strictly implemented the concept of environmental protection. The treatment process used for drying waste gas in the painting workshop converts high polluting waste gas into low polluting substances, with a treatment efficiency of up to 97%.
21st century: In April 2023, Tesla's super energy storage factory began construction in Shanghai. According to Tesla's third quarter financial report, energy storage may become a new growth point for Tesla. How do you view the development prospects of energy storage business in China? Will Megapacks produced by super energy storage factories be supplied globally like cars? What is the role of energy storage factories in achieving carbon neutrality goals?
Tao Lin: According to the "White Paper on Energy Storage Industry Research 2023", the global clean energy industry will enter a period of rapid development in 2022, with domestic and international performance far exceeding market expectations. In 2022, the newly added scale of new energy storage in China reached a historic high, and China's new energy storage will continue to develop at a high speed.
On April 9, 2023, the Tesla Energy Storage Super Factory project settled in the Shanghai Lingang New Area, marking Tesla's first energy storage super factory project outside of the United States. Tesla Energy Storage Super Factory will plan to produce Megapack, with product offerings covering the global market. Each Megapack unit at Tesla can store over 3 megawatt hours of energy, enough to meet the electricity demand of 3600 households for one hour. This means that it can store and release a large amount of energy, suitable for various applications, such as renewable energy systems, peak demand management, etc. At the same time, Megapack has a power output of up to 1.5 megawatts, which enables it to quickly respond to changes in energy demand and supply. It is suitable for large commercial projects and public utilities, and can also establish a local power grid that can be disconnected from the main grid, making it widely used. This is of great significance for energy conservation and carbon reduction, which will help improve energy usage patterns, improve energy efficiency, and promote the achievement of global carbon neutrality goals.