Chinese Tesla Gigafactory: Shanghai factory confirmed by local government

Image Source CNN

In April this year, however, China said it would be removing the 50-percent foreign ownership cap for electric vehicle (EV) and plug-in hybrid auto manufacturers as early as this year, in a move that would benefit Tesla enormously, which doesn't have local manufacturing and imports all the vehicles it sells on the Chinese market-the world's biggest EV market.

China presents a massive growth opportunity for Tesla and rivals such as BMW AG and Daimler AG, which are seeking to take advantage of a massive and fast-growing market for new-energy vehicles.

On Tuesday, Tesla CEO Elon Musk was in Shanghai to announce plans for the company's first factory in China.

"Last year, we announced that we were working with the Shanghai Municipal Government to explore the possibility of establishing a factory in the region to serve the Chinese market", a Tesla spokeswoman said in an statement emailed to Green Car Reports.

The quest to construct its third so-called gigafactory gained urgency as Donald Trump has engaged in a trade war that's ensnared imports of Tesla's vehicles into China.

Tesla chief executive Elon Musk will meet with Chinese officialsBeijingnghai and Baijing this week. Tesla is now in "production hell" trying to build its affordable Model 3 sedan at its existing factory in Fremont, California, although the company recently hit its internal goal of producing 5,000 Model 3s in a week.

Tesla and Shanghai authorities did not immediately respond to requests for comment. The automaker hopes to eventually build some 500,000 vehicles per year at its Shanghai plant.

Tesla plans to produce the first cars about two years after construction begins on its Shanghai factory, ramping up to as many as 500,000 vehicles a year about two to three years later, the company said.

This has made USA -built Tesla vehicles significantly more expensive in China.

Tesla hasn't provided an estimate of what the factory might cost to build.

It said Shanghai would provide full support to Tesla in a project combing manufacturing, research and development, and sales and aimed at super-charging electric-vehicle development in the city.

The company has boosted of Model S sedans and Model X crossovers in China by as much as $30,000 after Beijing imposed additional duties on American-built autos, putting its vehicles beyond the reach of more consumers in its No. 2 market globally. However, in May, China said it would do away with such ownership rules by 2022.

Tesla hiked prices in China over the weekend to a level more than 70 percent higher than in the United States amid mounting trade frictions between Washington and Beijing that have seen several US imports, including cars, become subjected to retaliatory tariffs of 25 percent. It's been an idea Musk has mentioned to investors since previous year. That gave it about 3 per cent of the nation's battery-powered electric-vehicle market, placing it as the No. 10 brand in that segment.

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