Tesla's new China factory is slated to produce the Model 3 by 2019 end. Chinese demand for the Model 3 has been weak and 2020 China losses should be -$490m.

The terms of Tesla's contract with China are draconian. If Tesla can't generate a 15% pre-tax margin by 2023, the government takes back the factory.



Handing back the factory could lead to a $2bn write-off or 38% of June-end equity. Tesla put shareholders' capital at risk by agreeing to China's lofty terms.

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There are over 27 new EVs scheduled to launch by 2020 end, the majority of which will head to China. Tesla could see its undoing in a market with such fierce competition.

With Model 3 sales falling in the US, the additional losses booked in China should lead to a 2020 net loss of -$3.3bn. Financing should be inevitable by Q1 2020 end.

Tesla (TSLA) is preparing to start Model 3 production at its Shanghai Gigafactory 3 (GF3) by year-end and Tesla fans are excited about China becoming the

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