Tesla to break ground on Shanghai 'Gigafactory'

Matthew DeBord  Business Insider

The said the plant will produce "affordable versions" of the Model 3 and Model Y, while more expensive versions, such as the Model 3 Performance, along with the Model S and Model X will continue to be produced at the company's main factory in Fremont, California, and exported to China.

The Tesla factory, which will be built with an investment of over 50 billion yuan (USD seven billion), is the largest foreign-invested manufacturing project in Shanghai's history, state-run Xinhua news agency reported.

The so-called Gigafactory would also be China's first wholly foreign-owned vehicle plant, a reflection of China's broader shift to open up its auto market even amid the whipsawing trade war.

Tesla boss Elon Musk (left) walks with Shanghai Mayor Ying Yong during the ground-breaking ceremony for a Tesla factory in Shanghai on Jan 7, 2019. The company wants to take advantage of demand for electric vehicles in the world's biggest auto market.

Musk was in Shanghai Monday to mark the official groundbreaking of Gigafactory 3, Tesla's first auto- and battery-assembly plant outside the U.S. Chinese consumers who have reserved the Model 3 can now configure it online, and the company expects deliveries for newly placed orders to start in March.

Elon Musk joined the mayor of Shanghai on Monday for the groundbreaking ceremony of Tesla's first factory outside the US and in the world's largest electric vehicle (EV) market, China.

Chief Executive Elon Musk was on hand at the 210-acre site to press a button to "switch on" the plant, which at the moment is a field. The two sides have called a truce in their trade fight and are engaged in talks to cool tensions, with China temporarily scrapping a retaliatory 25 percent tariff on US -made cars starting January 1.

China accounts for about 35 percent of all global electric vehicle sales.

But the pace of growth is expected to slow along with China's economy.

He said the so-called Gigafactory - which could cost as much as $5bn (£4bn) according to reports - would start Model 3 production at the end of year. "Aiming to finish initial construction this summer, start Model 3 production end of year & reach high volume production next year".

China has raised import duties on US-made cars as part of the broader trade fight with the US.

China typically requires foreign automakers to forge joint ventures with domestic firms when establishing manufacturing plants, which means sharing profits and technology with local partners.

Tesla purchased the land for the Shanghai factory just outside the city for approximately $140 million in October.

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