Beijing, Jan 7: As the US-China trade talks began, electric car maker Tesla CEO Elon Musk on Monday laid the foundation of a Tesla Gigafactory in Shanghai — the first-ever outside the US — that is expected to produce 500,000 electric vehicles per year and double the production capacity of Tesla.
Musk attended the ground-breaking ceremony of Tesla Gigafactory with Shanghai Mayor Ying Yong.
“Aiming to finish initial construction this summer, start Model 3 production end of year & reach high volume production next year,” Musk tweeted earlier in the day, adding that “Shanghai Giga production of Model 3/Y will serve greater China region”.
“Shanghai Giga will produce affordable versions of 3/Y for greater China. All Model S/X & higher cost versions of Model 3/Y will still be built in US for WW market, incl China,” he further tweeted.
According to reports, the Tesla Gigafactory is the biggest foreign investment in Shanghai.
Tesla’s first Gigafactory in Nevada produces Model 3’s drive units and battery packs. The Shanghai Gigafactory is set to be equipped with production lines for both batteries and electric cars.
According to a report in teslarati.com, by producing its lower-end Model 3 and Model Y in Shanghai, Tesla would be able to price the vehicles very competitively in the country — regardless of the presence of a trade war between the US and China.
Bullish on his Chinese dream, Musk last July said he aims to invest long-term in the country and signed a preliminary agreement with the Shanghai government to build a Tesla Gigafactory.
Musk had earlier said that China’s progress in advanced infrastructure is “more than 100 times faster than the US”.
According to a CNN report on Monday, Tesla is forging ahead in China “at a tricky time for both the company and the country”.
“China’s slowing economy and its trade war with the United States have hit the auto industry hard, with companies including General Motors (GM), Ford, Jaguar Land Rover and Volkswagen all reporting a slide in sales recently”.
“Tesla’s own prices in China have fluctuated wildly, with the company slashing prices several times last year even after China increased tariffs on imported US vehicles,” the report added.
Tesla has also cut its US prices by $2,000 as the federal tax credit granted to its buyers gradually gets reduced and phased out.