Tesla breaks ground on car gigafactory in Shanghai

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Tesla CEO Elon Musk and Shanghai’s Mayor Ying Yong attend the Tesla Shanghai Gigafactory groundbreaking ceremony in Shanghai. Reuters

SHANGHAI (Xinhua) – US electric carmaker Tesla Inc. on Monday broke new ground with its Shanghai factory, becoming the first to benefit from a new policy allowing foreign carmakers to set up wholly-owned subsidiaries in China.

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The new plant, Tesla’s first outside the United States, is located in Lingang Area, a high-end manufacturing park in the southeast harbor of Shanghai. It has an annual producing capacity of 500,000 electric cars.

Tesla signed the agreement with the Shanghai municipal government in July 2018 to build the factory. In October, the company was approved to use an 864,885-square-meter tract of land in Lingang for its Shanghai plant.

Tesla CEO Elon Musk and Shanghai government officials attended the groundbreaking ceremony on Monday.

“This will be the most advanced Tesla gigafactory,” Mr Musk said. “With resources here, we are able to build this factory in record time, and we are hoping to have initial production of Tesla Model 3 toward the end of the year and volume production next year.”

The Tesla factory, with an investment of over 50 billion yuan (7 billion US dollars), is the largest foreign-invested manufacturing project in Shanghai’s history.

Tesla brought its Model S, Model X and Model 3 to the China International Import Expo held in November 2018 in Shanghai, aiming to reinforce its presence in the world’s largest market for electric cars.

Tesla delivered 245,240 cars in 2018 worldwide, including 145,846 Model 3.

China set a milestone record of selling 1 million new energy vehicles (NEVs) in 2018. The country aims to double the sales to 2 million in 2020.

The production at the Shanghai plant will help Tesla significantly lower its cost and prices, giving it more edge in the market competition.

Model 3, for example, which starts at a price of 35,000 dollars in the US market, is sold between 500,000 yuan and 560,000 yuan (around 72,980 and 81,738 dollars) in China. After Tesla starts production of the model in China, the price of the car is expected to be much lower.

“We will be making affordable versions of the Model 3 and Model Y respectively. The expensive ones will still be made in the United States,” Mr Musk said.

Tesla has tapped into China’s growing mainstream electric car market and established its charging network covering most cities in the country’s developed regions, such as the Yangtze River Delta in east China and the Pearl River Delta in the south.

Over the past six years, Tesla has built over 1,500 Supercharging stations for charging from home and 1,850 Destination Charging stations for charging on the road in China as it expands its network.

The company set up in October 2018 its first overseas R&D innovation center in Beijing, with focus on areas such as software and hardware development, localization, China and Asia-Pacific data analysis, intelligent connected vehicles and charging technology.

“In the past five years, Tesla has witnessed Chinese car consumers’ growing awareness for environmental protection,” said Robin Ren, Tesla’s vice president of Global Sales and Service.

Shen Yuxiang, a Tesla user, drives the car shuttling between Shanghai and Hangzhou, capital city of neighboring Zhejiang Province, every weekend. Shen said he enjoys the 200 km ride as the car has no engine noise and boasts powerful acceleration.

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