New Chinese-made Tesla Model 3 cars progress through the assembly line. [Photo/WeChat account: shlgguanweihui]

The more recent arrival of American auto producer Tesla to the Lin-gang Special Area of China (Shanghai) Pilot Free Trade Zone has further accelerated the creation of a major automotive cluster in the region, which really started to take off when the SAIC Motor Lin-gang plant started operations there in 2008 – followed by a number of upstream and downstream enterprises which moved in, according to local officials.

Lin-gang Special Area is a newly added part of the Shanghai FTZ that was officially launched on Aug 20, 2019 – and not long after, Tesla started production there in its new $2-billion Gigafactory 3, its first production plant outside the United States.

On the occasion of the first anniversary of the establishment of Lin-gang, the area has now formed an industrial hub that focuses on hardware development and production in the west, with software development and testing in the east.

Tesla pursues supplier localization

According to data released by the China Passenger Car Association, 11,041 locally made Tesla Model 3 vehicles were sold in China in July, the sales topping 10,000 units for three consecutive months. In the face of strong market demand, Tesla's Gigafactory 3 in Lin-gang is running at full capacity, producing more than 3,000 vehicles a week, and the purchase quantities of components and parts has also increased accordingly.

To ensure the stability of the supply chain, Tesla China is speeding up the localization rate of components and parts. Shanghai Lingang Joyson Safety Systems Co Ltd, for example, has received orders from Tesla and is now opening corresponding production lines.

OEMs drive industrial agglomeration

In addition to Joyson, Lin-gang also has a number of Tesla upstream suppliers, all located in the vicinity of the gigafactory. Some of them have already settled in Lin-gang and won Tesla's favor by virtue of their technical strengths and geographical position. But more companies decided to move to Lin-gang after getting orders from Tesla.

"This is the driving effect of original equipment manufacturers (OEMs) on regional industrial chain agglomeration," said Lu Yu, deputy director of the high-tech industry and technology innovation division of the Lin-gang Special Area management committee.

"Tesla has brought a large number of upstream companies and many companies that were already wavering have made up their minds because of Tesla's arrival. SAIC's entry years ago had had the same effect, which formed the foundation of the auto industry chain in the area." Lu said.

More cooperation between east, west areas

Most of the automobile and parts factories are located in the west of Lin-gang. The intelligent development chain is about 20 kilometers to the east. Officials said that with the gradual improvement of the automobile industry supply, the linkage between the east and west wings is getting closer.

According to Lu, Lin-gang has a big advantage in terms of autonomous driving. The area has established an intelligent network automobile comprehensive test zone with the most complete application scenarios and test environment among its kind in China.

Officials said that SAIC and Tesla often visit the test area in the east and artificial intelligence companies such as SenseTime have also cooperated with plants in the west to produce intelligent cockpits.