TESLA says it has secured land in Shanghai for its first factory outside the USA, pushing ahead despite mounting US-Chinese trade tensions.
The electric car maker said it had signed a ‘land transfer agreement’ on a 210-acre site for the factory.
It announced the plan for a Chinese factory in July after the Beijing government said it would end restrictions on full foreign ownership of electric vehicle manufacturers.
Those plans have gone ahead despite US-Chinese tensions over Beijing’s technology policy. Washington imposed penalty tariffs on Chinese goods and Beijing retaliated by raising duties on imports of American products including electric cars.
China is the biggest global electric vehicle market and Tesla’s second largest after the USA.
California-based Tesla joins global firms including General Motors, Volkswagen and Nissan in pouring billions of dollars into manufacturing electric vehicles in China.
Local production would eliminate risks from tariffs and other import controls. It would also help Tesla develop parts suppliers to support afterservice and make its vehicles more appealing to mainstream Chinese buyers.
Robin Ren, Tesla’s vice-president of worldwide sales, called the move ‘an important milestone for what will be our next advanced, sustainably developed manufacturing site’.
Shanghai is a centre of China’s motor industry and home to state-owned Shanghai Automotive Industries – the main local manufacturer for GM and VW.
Tesla has said production in Shanghai will start two to three years after construction of the factory begins and eventually increase to 500,000 vehicles annually.
It has yet to say how it will pay for the factory, though. The company still has to give a price tag, but the Shanghai government said it would be the biggest foreign investment to date.
Tesla’s $5bn dollar (circa £3.8bn) Nevada battery factory was financed with help from a $1.6bn dollar (circa £1.2bn) investment by battery maker Panasonic.
Until now, foreign car makers that wanted to manufacture in China were required to work through state-owned partners.