Tesla, seeing its sales jump in China this year, is confident of reaching the tax revenue target it set for the Shanghai Gigafactory 3, the U.S. car giant disclosed in a filing.
"We believe the tax revenue target and capital expenditure requirement will be attainable even if our actual vehicle production was far lower than the volumes we are forecasting," the company said in a filing to the U.S. Securities and Exchange Commission.
The first phase of production at the Gigafactory 3 will have a capacity of 150,000 Model 3 vehicles, Tesla noted.
Tesla agreed to pay China 2.23 billion yuan ($324 million) in taxes each year starting at the end of 2023, the filing noted.
The company has also promised that its Shanghai plant would generate sales of at least 75 billion yuan per year by 2023, and it promised to spend 14.08 billion yuan in capital expenditures on the plant.
Tesla is required to hand the land back to the Chinese government if it doesn't meet the target, the company disclosed.
The U.S. carmaker has been pushing forward its construction project in Shanghai in what some experts have described as a rushed manner, as competition heats up in the domestic electric car market.
Despite this, Chinese sales figures still look bright for the U.S. car giant, according to the latest figures provided by Tesla. It sold $1.47 billion worth of cars in China during the first half of this year, up 41.8 percent on a yearly basis.
Tesla's second-quarter growth of 30.9 percent slowed from 53.3 percent growth in the first quarter, the data showed, but it was a major turnaround from the 15.4-percent sales revenue decline in China in 2018.
China is now Tesla's second-largest market in the world.
Zeng Zhiling, an analyst at Shanghai-based consultancy LMC Automotives, said that Tesla had a "quite good" sales performance this year.
"Tesla's revenue leap this year is mainly due to the debut of the new car Model 3 in China. Particularly, the price gap between overseas and made-in-China Model 3s isn't too large, so sales of Model 3s made overseas have also been hot in recent months," he told the Global Times.
According to Zeng, despite strong competition, Tesla retains an advantage in user experience and endurance mileage.
"As long as it adopts an appropriate pricing strategy for made-in-China Model 3s, sales should also be good for those cars in China," he forecast.
Made-in-China Model 3s are now priced at 328,000 yuan by Tesla, but several experts including Zeng have forecast that Tesla is very likely to cut the price further.