Tesla will increase the capacity of its gigafactory in Shanghai to 450,000 cars this year from the current 250,000 as the vehicles produced there enjoy growing popularity, the company said as quoted by Chinese media.

"Over a multiyear horizon, we expect to achieve 50 percent average annual growth in vehicle deliveries. In some years we may grow faster, which we expect to be the case this year," the company said.

Tesla started shipping China-made cars last year, with the Model 3. Earlier this year, the company started delivering China-made Model Y crossovers, too. The Model Y launched at a lower price than expected, prompting a rush to buy as it seeks to take up a bigger portion of the Chinese market.

In the first 11 months of 2020, Tesla's China sales stood at 111,600 vehicles, nearly 20,000 vehicles more than all three Chinese competitors combined, even though the local models are cheaper than Teslas.

This has led one analyst, Daniel Ives from Wedbush, to forecast that Tesla's total annual deliveries could hit 1 million next year driven by Chinese demand. China is the "heart and lungs" of Tesla's demand growth story," Ives said in December.

Tesla delivered close to 500,000 cars last year, in line with its target. This compared with 367,500 cars delivered the previous year. That milestone helped Tesla book its first full year of profit. Tesla plans to deliver between 840,000 and one million cars this year.

Sales for 2020 stood at $31.5 billion, Tesla reported earlier this month, and net profit came in at $721 million. While the bulk of the sales figure came from its core business, Tesla also made $1.6 billion from selling emissions credits to other carmakers. While the results were undoubtedly strong with the sales figure beating analyst expectations, those same analysts had expected a higher net result.

By Irina Slav for Oilprice.com

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