Published: Fri, October 19, 2018
Economy | By

Tesla: Tesla secures land in Shanghai for its first factory outside USA

Tesla: Tesla secures land in Shanghai for its first factory outside USA

With this, Tesla not only hopes to bring down manufacturing costs, but also gain other material advantages when it comes to selling its electric vehicles in the country.

The real estate transaction marks the first step for Tesla and its Chief Executive Elon Musk to build cars locally in China for the fast-growing market, even as tariffs imposed by Beijing on USA -made goods have caused Tesla to hike prices of its imported models.

Tesla's investment in China, the world's largest auto market, can help it effectively dodge import duties levied on foreign-made vehicles in China, which can be as high as 40 per cent.

Tesla on Wednesday secured a 860,000 square metre piece of land in Shanghai, in another step towards building its first plant outside the United States. But China is the No. 2 market for Tesla after the US, so it remains a priority market.

Tesla's super factory in Shanghai was officially launched in the Lingang Area after Tesla signed a land grant contract with Shanghai municipal administration for planning and land resources.

Last year, reports circulated that Tesla was in talks with the Shanghai government to build a factory in the city's "free trade zone".

Tesla has yet to say how it will pay for the factory. The Chinese government is aiming for NEVs to make up 20 percent of all vehicle sales by 2025, in an effort to curb pollution in the country.

Tesla signed a deal with Shanghai authorities in July to open a plant in the Chinese city with an annual capacity of 500,000 cars. The electric vehicle maker has purchased a massive patch of land on which its vision will become reality.

The company's planned Gigafactory 3 has been created to have a capacity of 500,000 vehicles. For the first nine months of this year, new-energy vehicle sales across mainland China jumped by 81.1 per cent from a year ago to 721,000 units.

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