Tesla to Build Factory in China with Goal of Building Half a Million EVs
Tesla has signed an agreement with the government of Shanghai to open a plant in the Chinese city with the aim of building 500,000 of its electric vehicles there. Construction is expected to begin "in the near future, after we get all the necessary approvals and permits," a company spokesperson said in an email.
Once construction begins, it will take about two years until Tesla begins producing vehicles at the site, which it's calling Gigafactory 3. From there, it will be another two to three years before the factory hits its maximum capacity of 500,000 vehicles per year, the company said. In addition to manufacturing, Tesla will have research and development and sales operations at the site, located in the Lingang area of the city.
"Shanghai will be the location for the first Gigafactory outside the United States," CEO Elon Musk said in a Shanghai government release provided by Tesla. "It will be a state-of-the-art vehicle factory and a role model for sustainability," Musk added. "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 recently increased its vehicle prices in China to more than 70 percent above U.S. levels, Reuters reported. The move, which other automakers have considered, was in reaction to China placing retaliatory tariffs on several U.S. goods, including autos. The vehicles built at Tesla's new plant will supply the China market. Musk has also said the company intends to build a Gigafactory in Europe, and eventually aims to have 10 to 12 Gigafactories worldwide.
In the U.S., Tesla has struggled to build its Model 3 at production sites in California and Nevada. Last week, the company said it had reached its long-sought but repeatedly missed goal of assembling 5000 units in a week, hitting 5031 total in the final seven days of the second quarter. The company said it expects to increase production of the Model 3 to 6000 units per week by late August. There were still about 420,000 unfilled Model 3 reservations at the end of the quarter; the company had delivered 28,386 Model 3s to date. It delivered a total of 40,740 vehicles in Q2, including 18,440 units of the Model 3, 10,930 of the Model S, and 11,370 of the Model X.
The company said Tuesday that the investment in China "will not impact our U.S. manufacturing operations, which continue to grow."