Tesla announced today that it secured a 210 acres (~860K m2) piece of land in Lingang, Shanghai for Gigafactory 3 in China.
The company says that it is ‘on track’ with its accelerated construction plan to establish manufacturing capacity in the country.
Earlier this summer, the company announced a deal with the Shanghai government to build a wholly-owned local factory.
Recent changes in import duties for foreign vehicles in China are strongly affecting Tesla in the country – urging them to establish local manufacturing capacity.
The trade tensions have resulted in an import tariff rate of 40% on Tesla vehicles versus 15% for other imported cars in China.
“In addition, Tesla continues to lack access to cash incentives available to locally produced electric vehicles in China that are typically around 15% of MSRP or more. Taking ocean transport costs and import tariffs into account, Tesla is now operating at a 55% to 60% cost disadvantage compared to the exact same car locally produced in China. This makes for a challenging competitive environment, given that China is by far the largest market for electric vehicles. To address this issue, we are accelerating construction of our Shanghai factory, which we expect to be a capital efficient and rapid buildout, using many lessons learned from the Model 3 ramp in North America.”
Now the automaker says that its plan is “on track” with the new plan as it secures a large piece of land for the vehicle factory.
They held a signing ceremony for the “Land Transfer Agreement” with leaders from the Shanghai Economics and Information Committee, Shanghai Lingang Area Development Administration, Shanghai Lingang Group and Tesla:
Robin Ren, Tesla’s Vice President of Worldwide Sales and the head of Tesla’s effort in China, commented on the milestone:
“Tesla’s mission is to accelerate the world’s transition to sustainable energy not only through all-electric vehicles, but also scalable clean energy generation and storage products. 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.”
When first announcing the plant, Tesla said that it expects “construction to begin in the near future” and that it “will take roughly two years” until they 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.”
Tesla CEO Elon Musk has previously said that all future gigafactories will produce both complete vehicles and the battery cells needed to build those vehicles.
During Tesla’s last earnings call, Musk said that Tesla expects to spend about $2 billion to quickly bring Gigafactory 3 to a production rate of about 250,000 vehicles per year before ramping up to full capacity.
None of these figures have been updated since Tesla accelerated its plans for Gigafactory 3.