A new report claims that Tesla is starting work on building a new factory adjacent to Gigafactory Shanghai in order to double production capacity to two million cars annually.

Tesla currently operates two main factories, Tesla Fremont and Gigafactory Shanghai, and it has Gigafactory Texas and Gigafactory Berlin slowly starting to ramp up production.

Those four projects alone should push Tesla’s production capacity beyond three million vehicles annually by the end of next year, but the automaker has much greater ambitions for this decade that will require several more factories. The company recently confirmed that it plans to announce a new location for a factory by the end of this year.

Last week, it was revealed that Tesla was receiving bids from different Chinese regions for a new factory in the country.

Now, Reuters reports that Tesla actually plans to stick to what it knows and build another factory adjacent to its existing one in Shanghai free trade zone:

Tesla Inc plans to start work on a new plant in Shanghai as soon as next month as part of a plan to more than double production capacity in China to meet growing demand for its cars in the country and export markets, two people familiar with the matter told Reuters.

As we reported yesterday, Tesla is also making additional investments into its existing Gigafactory Shanghai in order to increase production to one million units per year.

Now, the new factory would bring Tesla’s overall capacity in Shanghai to two million, according to the report:

Once the new plant is fully operational, Tesla will have the capacity to produce up to two million cars per year at its expanded Shanghai facility, the company’s main export hub, according to the people, who asked not to be identified in discussing still-private plans.

Tesla has had a lot of success in Shanghai with the factory starting production within a year of breaking ground and volume production came soon after. CATL, the world’s largest battery cell manufacturer and a Tesla supplier, is also building a giant factory in Shanghai, which is likely going to support this expansion.

Tesla China has yet to comment on the report.

Electrek’s Take

While the report is still unconfirmed, it would make a lot of sense. Everything went so well in Shanghai the first time – it would make sense to try to replicate that success.

I assume the main problem is going to be hiring. Going to another region would have given easier access to another talent pool, and now, Tesla has to dip back into the Shanghai talent pool or convince more people to move to the region.

Either way, if it turns out to be true, I think it was likely the safest decision in order to increase production capacity as fast as possible.

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