Tesla may invest in a $9 billion electric vehicle factory in China, according to local report

There’s no doubt that Tesla likes big factories. Its Fremont Factory is one of the biggest buildings on earth with 5.3 million square feet of manufacturing and office space – pictured above. The Gigafactory is set to be the biggest building on earth by footprint with 13 million square feet of space. The automaker also operates several other smaller but still fairly big facilities, like its final assembly line in Tilburg, Netherlands, which covers 840,000 square feet.

Now the company is about to invest in a factory in China. While the plans have yet to be unveiled, earlier this year, Tesla CEO Elon Musk confirmed that the automaker plans on securing a location and a local partner for a manufacturing facility in China by the middle of the 2016, and it looks like it will be huge.

We learn that Shanghai could now be the front-runner as Tesla reportedly signed a “non-binding memorandum of understanding” to invest in a $9 billion electric vehicle factory in the region.

The reports come from Bloomberg News in China:

“Jinqiao Group, a Shanghai government-owned company, has signed a non-binding memorandum of understanding with Tesla on building its production facilities in the municipality, said the person, who asked not to be identified because the negotiations are private. Each party may invest about 30 billion yuan ($4.5 billion) in the partnership, with Jinqiao putting up land for most of its share, the person said.”

The publication is citing only one source “with knowledge of the matter”. Tesla refused to comment and no one corroborated at the Jinqiao Group or the government, so you should take it with a grain of salt even though the timeframe matches Tesla’s previously stated timeline for an announcement on an upcoming factory in China.

The report follows other recent reports suggesting that Tesla executives visited locations in the Suzhou region and talked to potential manufacturing partners.

In order to establish manufacturing capacity in China and avoid the 25 percent import levy, any foreign automaker needs to partner with a local company.

While the scale of the project seems important based on Bloomberg’s report, Tesla CEO Elon Musk made it clear that any manufacturing in China would be to satisfy local demand for Tesla’s vehicles in the country.

China is now the world’s biggest automotive market and following the unveiling the of the Model 3, Tesla reported having received a “flood of pre-orders” from the country which has been its second-biggest market for reservations so far, according to Tesla’s Vice President of Asia-Pacific Ren Yuxiang.