Tesla CEO Musk breaks ground at Shanghai factory for China push

Matthew DeBord  Business Insider

"China is becoming the global leader in electric vehicle adoption, and it is a market that is critical to Tesla's mission to accelerate the world's transition to sustainable energy", Musk commented.

The said the plant will produce "affordable versions" of the Model 3 and Model Y, while more expensive versions, such as the Model 3 Performance, along with the Model S and Model X will continue to be produced at the company's main factory in Fremont, California, and exported to China.

Model 3, for example, which starts at a price of Dollars 35,000 in the USA market, is sold between 500,000 yuan and 560,000 yuan (around USD 72,980 and USD 81,738) in China.

Trade war aside, the carmaker is building the plant in an auto market that likely contracted previous year for the first time in decades.

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.

The so-called Gigafactory would also be China's first wholly foreign-owned auto plant, a reflection of China's broader shift to open up its vehicle market even amid a whipsawing trade war between Washington and Beijing.

"Over the last six years, we have opened 60 Tesla locations, almost 1,500 Superchargers, and more than 1,850 destination chargers in the country", the CEO Elon Musk said. The lower tariff will last until the end of March pending trade talks.

Tesla has tapped into China's growing mainstream electric auto 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.

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"When (Elon Musk) takes (the Model 3) to China, (Tesla's) gonna make a gazillion bucks". Tesla has said it plans to use mostly local debt to fund the factory.

"And the competition is getting more and more fierce". In October, the company got the approval to use an 864,885 sq mt tract of land in Lingang for its Shanghai plant.

Tesla secured the site for its 500,000 vehicle capacity plant in October and has already begun hiring staff and starting procurement for building materials.

At a ceremony at the site of the plant on the outskirts of Shanghai, Chief Executive Elon Musk joined the city's mayor and other local government officials to formally begin construction of a factory that Tesla has said will cost around $2 billion.

"Shanghai Giga production of Model 3 and Model Y will serve greater China region", Musk added in another one.

"Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today!" said Musk on Twitter.

Shares in Chinese suppliers to Tesla, including Tianjin Motor Dies Co Ltd and VT Industrial Technology Co Ltd, rallied on Monday after Musk's comments.

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