plans to restart the third phase of Shanghai plant project, possibly focusing on the production of the $25,000 model, according to local media.

(Image credit: CnEVPost)

Tesla (NASDAQ: TSLA) plans to restart the third phase of its Shanghai plant project, possibly focusing on the production of the $25,000 model it will launch in the future, according to a report in local media outlet LatePost today.

Tesla began preparations for the construction of the Giga Shanghai phase three vehicle factory in 2021 and assembled a team, but suspended the move in the middle of last year, the report said, citing a person close to the matter, adding that most of the people the company recruited for the project have been transferred to other departments.

If it moves forward, the future production focus of the phase three project could be on Tesla's $25,000-priced model first teased in 2020, which will be key to Tesla's goal of reaching 20 million annual sales by 2030, the report said.

Shanghai is Tesla's most efficient production center in the world. Its Texas factory takes 76 seconds to get a car off the line, while the Shanghai plant takes just 37 seconds, the report noted.

The shanghai plant phase three vehicle plant, if it comes to fruition, will further boost Tesla's total production capacity.

In January, Bloomberg reported that Tesla had planned to double the total production capacity of its Shanghai plant to 2 million vehicles per year with the phase three project, the LatePost report noted.

Tesla's Shanghai factory currently has a capacity of more than 950,000 vehicles per year, its largest in the world, according to the company's third-quarter financial report released in October.

It's worth noting that the bigger challenge Tesla is facing right now is not a lack of capacity but a lack of demand, the LatePost report said.

Tesla's share of the EV market in the US has fallen from 62 percent in the first quarter to less than 50 percent in the third quarter, the report noted.

In the more competitive Chinese market, the six-year-old Model 3 and four-year-old Model Y are no longer as competitive as they were when they first launched against models from rivals including , Aito, and , the report said.

In addition, the LatePost report mentioned that Tesla's energy storage battery products, which will begin production in Shanghai next year, will also be sold in China

Tesla signed a deal with Shanghai's Lingang authorities on April 9 to build a new Megafactory in the area, which will be dedicated to the production of Tesla's energy storage product Megapack.

The Megafactory will be Tesla's first energy storage system factory outside of the US domestic market. Its initial plan is to produce up to 10,000 commercial energy storage batteries per year, with nearly 40 GWh of energy storage, and the products will be available to the global market.

The factory is scheduled to begin construction in the third quarter of this year and go into production in the second quarter of 2024, according to an announcement by Lingang special area administration in April.

Tesla has already recruited a head of research and development for the Megafactory and is hiring a head of sales, according to the LatePost report today.

The energy storage products planned to be sold in China are expected to help Tesla expand its revenue and profit, with the business, which currently caters to the US market, bringing in $1.56 billion in revenue in the third quarter, or 7 percent of total revenue, the report said.

Tesla's Megafactory in Shanghai will initially purchase batteries from , and may later move to producing its own batteries, the report said, citing speculation from industry sources.

Tesla sells 82,432 China-made vehicles in Nov, up 14.31% from Oct