Elon Musk breaks ground on first Tesla factory outside US

Gladys Abbott
January 8, 2019

Tesla (TSLA) has broken ground on a Shanghai, China, factory - the first plant outside the US for the electric auto manufacturer.

Chinese media reports said Musk would be in Shanghai to break ground on the plant, which Bloomberg News has reported could cost $5 billion.

Tesla said on Friday it plans to start delivering Model 3 cars to customers in China in March, cementing a time frame that the U.S. electric vehicle (EV) maker's chief executive, Elon Musk, tweeted about late a year ago.

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

"Affordable cars must be made on same continent as customers", Musk wrote in another Twitter post.

As a USA -made vehicle, Tesla's cars in China have been subject to steep tariffs, and sales have suffered from the U.S. The lower tariff will last until the end of March pending trade talks.

Trade war aside, the carmaker is building the plant in an auto market that likely contracted a year ago for the first time in decades. In 2018, 1 million new energy vehicles were sold in the country.

The Shanghai plant would supply the "Greater China region" with "affordable versions" of the Tesla Model 3 - the carmaker's first mid-price, mass-market vehicle - and its planned Model Y, Musk tweeted.

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Higher-priced models will be built in the United States for export to China, Musk said.

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.

The automaker has said it aims to initially produce about 3,000 Model 3 vehicles per week at the plant and localise its manufacturing and supply chain.

Tesla's plans come as China's economy faces a slowdown - something Apple said has contributed to concerns it is going to miss its quarterly revenue target.

"And the competition is getting more and more fierce".

Tesla Inc. broke ground Monday for a factory in Shanghai, its first outside the United States.

The Shanghai venture comes as USA companies face pressure from President Donald Trump to keep manufacturing jobs at home, and as Beijing and Washington wage a trade spat that has seen both sides levy tariffs on hundreds of billions of dollars of products.

The U.S. wants China to address intellectual property theft and other aggressive measures that have driven Beijing's efforts to supplant U.S. technological dominance.

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