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Tesla Secures Land For Shanghai Gigafactory In China

Following Gigafactory 1 in Nevada and Gigafactory 2 in New York, Tesla is now looking towards China for another manufacturing plant. Announced in July 2018, the agreement with the Chinese government is now official, with Tesla winning a long-term lease for 210 acres in Lingang, Shanghai.
Tesla Model S production 1 photo
Photo: Tesla
The Palo Alto-based automaker plans to build up to 500,000 vehicles per year at the site, which sounds extremely ambitious considering the sales volume from 2017. It’s understood the 50-year lease is worth 973 million Chinese yuan, translating to $140 million at the current exchange rate.

“Local production would eliminate risks from tariffs and other import controls,” according to ABC News, which highlights that China is the biggest electric vehicle market in the world and Tesla’s second largest after the United States. “It would help Tesla develop parts suppliers to support after service and make its vehicles more appealing to mainstream Chinese buyers.”

Shanghai is also the home of Shanghai Automotive Industries Corporation, which manufactures General Motors and Volkswagen Group vehicles through joint ventures with the American and German automakers. Construction of the Shanghai Gigafactory is understood to begin “within the next few quarters,” and much of the cost will be funded with local debt.

The thing is, Tesla is still struggling in China in the face of competition from BAIC, BYD, and other EV-making companies from the Middle Kingdom. Sales in 2017 number less than 15,000 vehicles, translating to a market share of less than 3 percent.

Based on earlier reports on the Shanghai Gigafactory, we’re expecting the Model Y crossover to roll off the line starting in 2020. Depending on regional demand, chances are Tesla will produce the Model 3, Model S, and Model X in this part of the world too.

But wait, there’s more! Tesla is discussing with multiple European countries for a fourth Gigafactory. Elon Musk’s leading choice for the site is Germany, adding that “the German-French border makes sense, near the Benelux countries.”
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About the author: Mircea Panait
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After a 1:43 scale model of a Ferrari 250 GTO sparked Mircea's interest for cars when he was a kid, an early internship at Top Gear sealed his career path. He's most interested in muscle cars and American trucks, but he takes a passing interest in quirky kei cars as well.
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