Economy

Elon Musk says Tesla's Shanghai factory is 'groundbreaking'

Elon Musk says Tesla's Shanghai factory is 'groundbreaking'

After four years of planning, Tesla Inc. finally broke ground on its planned $5 billion factory in the world's biggest auto market. "This week, we've started taking online orders for Model 3 in China, so that customers can configure their vehicle to take delivery in the weeks ahead, and Gigafactory 3 is another example of Tesla's commitment to the China market". The "gigafactory" also will produce Tesla's proposed Model Y auto, which will be launched this year. The factory, now just an expanse of muddy fields about two hours from Shanghai, will produce affordable versions of Tesla's Model 3 and Model Y for Greater China, he said during the visit, which took place on a cold, rainy day.

China is the largest market for electric vehicles, and most forecasters predict EV sales in the country will accelerate rapidly as government regulation drives toward a goal of 100 per cent electric vehicles by 2030.

Tesla's US-made cars are now subject to a 15 per cent tariff in the mainland after Beijing rolled back an extra 25 per cent tariff it slapped on United States vehicle imports for three months from January 1. The lower rate will last until the end of March pending trade talks.

'Aiming to finish initial construction this summer, ' Musk tweeted.

'Tesla's sales (in China) have dropped over the past few months because of high price caused by the tariffs.

"And the competition is getting more and more fierce".

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Tesla has been pushing forward its plans for the plant after it secured the site in October, hiring staff, starting procurement for building materials and setting up a financial leasing company in the city.

Tesla is eager to get the factory up and running as soon as possible so it can begin constructing select models locally.

The Shanghai venture comes as USA companies face pressure from President Donald Trump to keep manufacturing jobs at home, and as Beijing and Washington wage a trade spat that has seen both sides levy tariffs on hundreds of billions of dollars of products.

Tesla has yet to give a price tag but the Shanghai government said it would be the biggest foreign investment there to date.

The Shanghai factory is being billed as a Gigafactory that "will allow Tesla to localize production of Model 3 and future models sold in China, with plans to eventually produce approximately 3,000 Model 3 vehicles per week in the initial phase and to ramp up to 500,000 vehicles per year when fully operational (subject to local factors including regulatory approval and supply chain constraints)".