Tesla: Gigafactory site secured in Shanghai

Kenny Grant
October 19, 2018

"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", Ren said in a statement.

"Taking ocean transport costs and import tariffs into account, Tesla is now operating at a 55 percent to 60 percent cost disadvantage compared to the exact same auto locally produced in China", the company said.

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.

Tesla is gaining around early Wednesday after the company announced it has secured a site in Shanghai, China, to build its first overseas Gigafactory.

China is the biggest global electric vehicle market and Tesla's second-largest after the US.

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However, Reuters reported that the Shanghai Bureau of Planning and Land Resources said a 213 acre plot of land in Shanghai's eastern Lingang district had been sold at auction at a price of 973 million yuan ($140.51 million). Tesla claims it will then take a further "two to three years [after opening] before the factory is fully ramped up".

Chief executive Elon Musk said in a September 30 letter to United States regulators that the company was "very close to achieving profitability".

Analysts expect Tesla to report a loss of about 200 million dollars (£152 million) for the three months ending on September 30 after the previous quarter's 742.7 million dollar (£565 million) loss. The local economy will also benefit from the thousands of new jobs the Gigafactory will create and the purchase and delivery of the components Tesla needs to build its electric vehicles.

Lower-priced electric models from GM, VW and other brands are due to hit the market this year, well before Tesla is up and running in Shanghai.

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