Tesla to break ground on Shanghai 'Gigafactory'

Roman Schwartz
January 7, 2019

It marks a major bet by Tesla as it looks to bolster its presence in the world's biggest auto market where it faces rising competition from a swathe of domestic rivals and its sales have been hit by increased tariffs on US imports.

On Friday, the 4th of January, the Tesla Inc. said that they had been planning to start delivering their Model 3 cars to the customers in China from March, 2019, concreting the time-frame, which was tweeted by Tesla head, Elon Musk past year.

Electric carmaker Tesla's first plant outside the United States, the Gigafactory 3 in Shanghai, is about to begin construction. The challenging environment also includes competition from several start-ups that all want to be like Tesla.

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China raised the import tariff on US-made cars to 40 percent in July, but cut it back to 15 percent from the start of this year as part of a ceasefire in a trade war with the United States.

At the height of the dispute, when China imposed the additional duty on American-made autos, Tesla sales in the Asian country - which is its second-largest market - plunged to as low as 211 in October, from 3,552 in June, according to data compiled by Bloomberg Intelligence.

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The Dow Jones Industrial Average climbed 746.9 points, or roughly 3.3 percent, while the Nasdaq shot up 4.3 percent, or 275.4 points.

But the drop in the sales isn't just a direct effect of the trade war, which is why Monday's groundbreaking comes at an uncertain time.

Passenger vehicle sales in the world's second-largest economy declined for six consecutive months through November, putting them on track for the annual decline.

A Chinese flag is seen on the land secured by Tesla for its Gigafactory in Shanghai.

"Shanghai Giga will produce affordable versions of 3/Y for greater China".

The facility is expected to churn out about 250,000 vehicles annually at first - the Model 3 and the planned Model Y - and that capacity will double over time.

The Shanghai government said in a statement its mayor Ying Yong urged the firm to "accelerate" work on the factory and said production would start to some degree in the second half of 2019 during a land visit in December a year ago.

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