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Dec.26 (NBD) -- Onsite investigation by news portal International Financial News showed that full-scale construction of Tesla Shanghai factory hasn't started, raising concerns about whether it can be put into production on schedule.

It is noticed that there were less than 30 workers at the entrance of the factory and no more than 10 units of engineering equipments such as excavators.

Looking down from a higher location, International Financial News found the ground in the factory has been leveled but there were no signs of further construction.

The gigafactory, with a total investment of 50 billion yuan (7.3 billion U.S. dollars), is scheduled to start partial production in the second half of 2019 and is expected to reach an annual production capacity of 500,000 units in two to three years. It means the production time is less than one year away.

An insider said that to ensure on-time production, Tesla may have only one option which is CKD (Completely Knocked Down), as SKD (Semi Knocked Down) is not in line with regulations in China. However, the company still has to run against the clock to meet the deadline as Tesla only has about half of the time that usually it takes to build a factory.

Ren Wanfu, analyst in the auto-industry, said that the Tesla gigafactory in Shanghai may be waiting for approvals from environmental regulators and it also takes time to land good construction contractors.

Public information shows that estimation of environmental impacts of the factory (first phase) has been released at late October and part of the procurement and project bidding works has already started.

Financial pressure is another problem facing Tesla when building the factory.

This August, Tesla Chairman Elon Musk cut the construction funding for the Shanghai factory from 5 billion U.S. dollars to 2 billion U.S. dollars and will seek local loans to meet the capital needs.

In the second quarter of this year, Tesla reported a 717-million-dollar loss with debts totaling 22 billion U.S. dollars. It turned profitable in the third quarter with earnings hitting 255 million U.S. dollars.

Tesla's financial performance is not stable, the insider added. The industry analyst noted that Tesla will cause a catfish effect among EV manufacturers in China. However, domestic investors may take a wait-and-see attitude towards this loss-ridden company at the time being.

Weak sale is another problem for the EV maker.

According to statistics released by the China Passenger Car Association, 3,169 Tesla models were sold in the country in the third quarter of this year, down 37 percent year on year. In October, only 211 Tesla models were sold in the country, representing a sharp decrease of 70 percent from the same period of last year.

It's noticed Tesla confirmed the Model 3 orders from the first batch of Chinese customers, setting the starting price at 588,000 yuan (85,409.3 U.S. dollars) which is 80 percent higher than the same model in the U.S.

Auto-industry analyst Zhong Shi deemed the reasonable price of Models in China to be around 400,000 yuan (58,101.5 U.S. dollars). Based on the figure, the Model 3 price in China is still overpriced even after it has been down-regulated twice. 

In addition, Tesla is facing growing competition from more rivals. Mercedes-Benz and Audi, respectively, released their first all-electric models EQC and e-tron in September this year. Both of them will hit the market in 2019 and be produced in China later.

According to Li Bin, chairman of EV startup Nio, foreign car makers will make an aggressive foray into the all-electric car market by 2020. If so, the competition will be extremely fierce when Tesla reaches its full production capacity.

Email: tanyuhan@nbd.com.cn