Musk Breaks Ground For Tesla's China Gigafactory

08 January, 2019, 20:42 | Author: Eric Barnett
  • Matthew DeBord  Business Insider

The factory will produce the Model 3, a mass-market vehicle, by the end of the year, Mr Musk tweeted.

"Over the last six years, we have opened 60 Tesla locations, almost 1,500 Superchargers, and more than 1,850 destination chargers in the country", the CEO Elon Musk said. The Shanghai plant is created to make another 500,000 cars annually-a massive step up for a company that sold fewer than 14,000 cars in China in the first nine months of 2018, according to LMC Automotive, which tracks the auto market.

The factory is Tesla's first outside of the United States.

Tesla chief executive Elon Musk reached a new milestone on the automaker's latest Gigafactory in Shanghai on Monday.

The carmaker, which now imports US-made vehicles to sell in China, is building the plant in an auto market that is set to contract this year for the first time in decades, though so-called new-energy vehicle (NEV) sales have been strong.

Gigafactory 3 will be China's first wholly foreign-owned auto plant and should allow Tesla to minimise the impact of the trade war which has seen Beijing impose big tariffs on USA vehicle imports.

CEO Elon Musk said Monday on Twitter that the company will start production in China of its Model 3 and a planned crossover by the end of the year.

According to state broadcaster CCTV, Tesla Gigafactory 3 is the largest foreign investment ever in Shanghai, and the expected annual output will be 500,000 electric vehicles. Beijing has since dropped tariffs on some USA goods, allowing Tesla to slash the cost of vehicles to China.

Apple sparked global alarm over the prospects for the world's second-largest economy last week when it cut its revenue forecast, citing slowing demand in China and the trade war.

Despite its relative affordability compared to other Tesla models, the price of a US-made Model 3 now starts at about $50,000, but Musk has said he aims to get that down to $35,000. "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".

Till now, foreign automakers in China were required to forge joint ventures with domestic firms for establishing manufacturing plants, which means sharing profits and technology with local partners.

Alan Kang, Shanghai-based analyst for consultancy LMC Automotive: "Tesla's sales [in China] have dropped over the past few months because of high prices caused by the tariffs".



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