Tesla purchases land for plant in Shanghai

19 October, 2018, 13:30 | Author: Regina Silva
  • The Chinese government recently said it would lift the requirement that foreign manufacturers that wanted to build EVs in China had to work with state-owned partners

With this, Tesla not only hopes to bring down manufacturing costs, but also gain other material advantages when it comes to selling its electric vehicles in the country.

China is an important market, and has huge potential for something as novel as electric cars.

The website of Shanghai Land Market, however, shows the original starting price of the land for sale was 973 million yuan (about 141 million US dollars).

Tesla on Wednesday said it has scooped up a 210-acre plot of land in China to build its next Gigafactory - digging itself deeper into the middle of the tariff battle between President Trump and China.

Tesla Inc (NASDAQ:TSLA) previously announced plans for a factory in China have taken a major leap forward. Building the cars locally will allow Tesla to sell its vehicles for a lower price and better compete with rival European automakers, such as BMW.

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In its recent Q3 financial filing, Tesla lamented ongoing "trade tensions" that have resulted in an import tariff rate of 40 percent on Tesla vehicles versus 15 percent for other imported cars. Beijing responded by slapping an additional 25 percent tariff on cars imported from the USA, raising the total tariff to 40 percent.

The announcement was made on Wednesday, when Tesla executives, leaders of the Shanghai Economics and Information Committee, Shanghai Lingang Area Development Administration and the Shanghai Lingang Group, all came together for an agreement signing ceremony. The Chinese government is aiming for NEVs to make up 20 percent of all vehicle sales by 2025, in an effort to curb pollution in the country.

The Gigafactory will eventually have the annual capacity to produce 500,000 vehicles within the first decade of operation.

The factory will help tap China's rapidly growing market for so-called new-energy vehicles (NEVs), a category comprising electric battery cars and plug-in electric hybrid vehicles, even as China's wider auto market cools. For the first nine months of this year, new-energy vehicle sales across mainland China jumped by 81.1 per cent from a year ago to 721,000 units.

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