Tesla Secures Land in Shanghai for First Foreign Factory

19 Octubre, 2018, 13:33 | Author: Arnold Perez
  • Land transfer agreement signed construction to follow

The real estate transaction marks the first step for Tesla and its Chief Executive Elon Musk to build cars locally in China for the fast-growing market, even as tariffs imposed by Beijing on USA -made goods have caused Tesla to hike prices of its imported models.

Tesla signed an agreement with the government for a 860,000-square-meter plot of land, or approximately 210 acres, according to a Wednesday announcement.

"Securing this site in Shanghai, Tesla's first Gigafactory outside of the United States, is an important milestone for what will be our next advanced, sustainably developed manufacturing site", Robin Ren, Tesla's vice president of worldwide sales, said in a statement to Reuters.

Tesla's investment in China, the world's largest auto market, can help it effectively dodge import duties levied on foreign-made vehicles in China, which can be as high as 40 per cent.

In its recent Q3 financial filing, Tesla lamented ongoing "trade tensions" that have resulted in an import tariff rate of 40 percent on Tesla vehicles versus 15 percent for other imported cars.

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Tesla has said production in Shanghai will begin two to three years after construction of the factory begins and eventually increase to 500,000 vehicles annually.

Tesla has confirmed that the contract with the local government is already signed.

Tesla's $5 billion Nevada battery factory was financed with help from a $1.6 billion investment by battery maker Panasonic Corp. Much of the cost will be funded with "local debt" the letter said.

Analysts expect Tesla to report a loss of about 200 million dollars (£152 million) for the three months ending on September 30 after the previous quarter's 742.7 million dollar (£565 million) loss.

Beijing wants to become the world leader in new-energy vehicles, with technologies that meet the highest global standards, by 2025. The company is the first to benefit from a new policy allowing foreign carmakers to set up wholly-owned subsidiaries in China.

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