Saturday, 19 January, 2019


Musk Breaks Ground For Tesla's China Gigafactory

Matthew DeBord  Business Insider Matthew DeBord Business Insider
Conrad Doyle | 08 January, 2019, 20:46

In July, Tesla raised the prices of the Model 3 and the Model Y by about 20 per cent in the mainland after Beijing slapped an additional 25 per cent tariff on American-made vehicles, a retaliatory measure against the U.S. administration as trade tensions between the two countries escalated. He was in Shanghai for the ground-breaking ceremony.

Tesla CEO Elon Musk announced on Twitter Sunday night that the company would break ground on its new Chinese factory on Monday.

Tesla is eager to get the factory up and running as soon as possible so it can begin constructing select models locally.

China raised the import tariff on U.S. cars to 40% in July, then cut it to 15% from the start of this year as part of a trade war truce.

As the company's troubled ramp-up of existing Model 3 production showed, Tesla is in dire need of more manufacturing space than the Fremont factory affords. With these latest filings, Tesla had also broken the 200k barrier with its Model 3 VIN registrations - a notable milestone for a vehicle whose production was beset by challenges on its first year. All Model S/X & higher cost versions of Model 3/Y will still be built in United States for WW market, incl China, ' Musk said in another tweet, referring to the worldwide market.

Tesla was the first foreign auto maker to take advantage of a recent rule change allowing foreigners to own their China business, instead of having to work with Chinese partners as previously required.

In a sign that Tesla is preparing to start construction of its first factory in China, Musk said last week that he would be visiting China soon for the groundbreaking ceremony.

Tesla has been pushing forward its plans for the plant after it secured the site in October, hiring staff, starting procurement for building materials and setting up a financial leasing company in the city.

The facility is expected to churn out about 250,000 vehicles annually in the first phase, and that capacity will double over time, the Shanghai government said in a statement Monday.

"It makes sense for Tesla to commit fully to becoming a leading EV brand in the world's largest EV market", said Bill Russo, chief executive of Shanghai-based consulting firm Automobility.

Shares in Chinese suppliers to Tesla, including Tianjin Motor Dies and VT Industrial Technology, rallied on Monday after Musk's comments. He said production would start to some degree in the second half of 2019.

China accounts for about 35 percent of all global electric vehicle sales.

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