Elon Musk says Tesla's China factory could begin production in roughly three years

Darrell Etherington

Tesla officially confirmed its plans to set up a manufacturing facility in China last week, and now we know a bit more about what it's planning to do in the key market in terms of production. A the time, Tesla wouldn't say much more beyond that i's "committed to the Chinese market" and interested in exploring manufacturing facilities around the world. Tesla CEO Elon Musk went into a bit more detail on the earnings call for its Q3 results today.

"Don't set your watch by this," Musk said, but noted that "there's a rough target of starting production in the next three years, and it would be serving the China market and some of the surrounding region."

The factory will produce Model S and Model X, but is intended to build primarily Model 3 and the forthcoming Model Y affordable crossover SUV, Musk said, since "it's really the only way to make the vehicles affordable for China." Asked about total eventually production capacity and scale relative to its existing facilities, Musk said that "it's at least a couple hundred thousand vehicles per year, maybe more."

This is still early days for any finalization of plans, and Tesla noted on the call that there won't be any major capital expenditure on the China plant until at least 2019.

The Wall Street Journal report confirming the plans for the factory noted it would be located in the free trade zone located outside of Shanghai, and that Tesla aims to retain sole ownership rather than partnering with a local automaker, which is the way current OEMs operate in order to avoid China's 25 percent import tax on foreign carmakers.