Tesla is considering a massive expansion of its global production capacity for its long-rumored entry-level compact car, with its Shanghai factory potentially being lined up to deliver 1 million units of the new model annually, Chinese media outlet 36Kr reported.

Why it matters: Unofficially dubbed the “Model 2” or “Model Q” by Tesla observers online, the new car is expected to be priced as low as RMB 150,000 ($21,800) and is aiming to take more shares of the Chinese electric vehicle market.

Details: Citing several industry insiders, 36Kr reported on Tuesday that Tesla is targeting an annual capacity of 4 million units worldwide for the new budget model, adding that the plan is still in its early stages.

  • The company’s planned factory in Mexico will mainly be responsible for a yearly output of 2 million units in North America, while its assembly plants in Shanghai and Berlin will share the rest evenly.
  • Mass production of the new model can’t happen until next year at the earliest, as Tesla has to ensure that the supply chain ramp-up is synced to the output expansion, the report said.
  • Tesla did not respond to TechNode’s request for comment.

Context: Tesla on Wednesday revealed the latest part of its overall company plan, which included details for an unnamed compact vehicle model to come with a 53 kilowatt-hour (kWh) battery pack. The company said there would be a goal of selling 42 million units of the new model globally, without giving a timeframe.

  • In September 2020, chief executive Elon Musk said the company aims to eventually make 20 million EVs per year by the end of this decade, the Wall Street Journal reported.
  • Tesla shipped nearly 230,000 China-made EVs during the first three months of this year, according to figures from the China Passenger Car Association, with its Shanghai Gigafactory having the capacity of making 1.1 million EVs annually.
  • The US automaker will be able to cut the cost of its next-generation vehicles by half from those of its existing offerings, chief engineer Lars Moravy told investors on March 1, Reuters reported.
  • Tesla has been selling its popular Model 3 sedans at a starting price of RMB 229,900 and Model Y crossovers from RMB 261,900 in China after announcing an overnight price cut of up to 13.5% on Jan. 6.

Jill Shen is Shanghai-based technology reporter. She covers Chinese mobility, autonomous vehicles, and electric cars. Connect with her via e-mail: jill.shen@technode.com or Twitter: @yushan_shen