Tesla Inc has reportedly signed a deal with China on the construction of an electric vehicle factory in Shanghai with a capacity of half a million electric cars a year. Shanghai Municipal People’s Government said it will be the largest industrial facility in the region.
The parties have long discussed the project. Over the recently imposed tariff on auto imports from the US, the price tag for Tesla Model 3 in China is 25% higher than in the US or Europe so these cars were too expensive for local motorists.
Cars produced in China will be sold directly at Chinese market.
“It will be a state-of-the-art vehicle factory and a role model for sustainability. We hope it will be completed very soon. We’ve been impressed by the beauty and energy of Shanghai and we want our factory to add to that,” Tesla CEO Elon Musk said.
“Last year we announced cooperation with the Shanghai authorities. Its purpose is to explore the possibilities to create a factory that could serve the Chinese market,” a Tesla spokesman said. “Today we signed an agreement in order to start the construction of Gigafactory 3, a new industrial facility in Shanghai.”
“From there, it will take roughly two years until we start producing vehicles and then another two to three years before the factory is fully ramped up to produce around 500,000 vehicles per year for Chinese customers,” the spokesman said.
After obtaining all the necessary permits, Tesla will be able to achieve the set goal of producing 500,000 electric vehicles a year not earlier than in a few years. The construction of the factory will take about two years, and to achieve the set production volumes – another three years.
It should be taken into account that Tesla is too optimistic about deadlines. Nevertheless, in late June, the company reported bringing production volumes to 5000 electric vehicles a week at its Fremont facility, the goal set at the end of 2017.
Tesla hasn’t provided an estimate of what the factory might cost to build.