Tesla Inc. reveals its big plans for China on Wednesday as it looks to produce two models of its sought-after electric vehicles, the Model 3 and Model Y, in the first phase project which will take place in its newest Gigafactory in Shanghai, China, the local government filing confirmed.
Last week, the Business Times reported the EV maker's continuing thrust to realize the plans to establish its first global operations outside of its home turf in the US. With the procurement of the 210-acre (860,000 square meters) plot of land in Shanghai, China, Tesla's next step now is to build an assembly factory on the site which will be aptly called Gigafactory 2.
This decision from the Palo Alto, California-headquartered tech firm came after the Xi Jinping administration announced that it would exempt full foreign-owned EV manufacturers from its trade restriction policies.
This is in line with the government's unrelenting efforts to speed up China's industrial growth, particularly in the EV sector.
And now, the report from Reuters cited a recent filing by the environmental audit firm which conducts a feasibility study for this wide-scale project saying that this new factory in eastern China will accommodate first the production of Tesla's Model 3 and Model Y cars, with an annual output capacity of 250,000 units.
Although it is yet to be confirmed, it looks like Tesla could be reducing its output by almost half per year considering its earlier production estimate of 500,000 vehicles per year.
The news agency failed to obtain the company's official statement from Tesla's designated spokesperson.
The New Factory
The Gigafactory 3 will be Tesla's first overseas factory and according to analysts and close followers of the company, this new site could be very impressive both in size and capacity. It is expected to produce not only car units but batteries as well.
As early as August, Tesla has already begun its hiring process for local workers in the area.
The estimated cost of this construction project could hit more than $2 billion, the funding of which would be taken via loans from several financing institutions in the region.
Obviously, it will take a number of years for Tesla to begin picking up its projected manufacturing capacity to full speed.
China has been one of Tesla's significant markets of its automotive products. The tit-for-tat tariff implementation by China and US endangers the company's business abroad. The price increase is just but one of its immediate effects.
By building the cars within China, Tesla should be able to avoid these unwanted scenarios, allowing it to focus on answering the country's ever-growing demand for electric vehicles.
