Tesla buys new plot for its first China factory

Tesla successfully acquired an 864,885-square meter plot in Shanghai’s Lingang area for the electric car maker’s new factory, according to an announcement from Lingang Wednesday afternoon. No price was immediately disclosed.

Plans for the wholly-owned factory were first announced in July. Lingang is located on the coast, about 47 miles southeast of the center of Shanghai or a roughly two-hour subway ride. Several auto manufacturers with foreign ties have facilities there, and unmarked test vehicles can be seen roaming the streets.

Tesla expects the factory to produce its first cars in three years, according to an earnings release in August. The facility will initially have capacity for about 250,000 vehicles and battery packs a year, and plans to eventually double that, the release said.

Funding will mostly come from local debt, and Tesla’s own investment “will not start in any significant way until 2019,” the company said in the August release.

Producing cars in China, the world’s largest market for electric vehicles, would significantly lower costs for Tesla.

The company noted in an Oct. 2 report it cannot access the same cash incentives as local Chinese manufacturers, and overall ocean transport costs and tariffs mean the automaker is operating at a 55 percent to 60 percent cost disadvantage compared with a domestic equivalent.

Shanghai-based Nio, nicknamed the “Tesla of China,” went public in the U.S. in September and said earlier this week it beat its own fiscal third quarter production target by several hundred vehicles. Baillie Gifford, Tesla’s largest outside investor, disclosed earlier this month an 11.4 percent stake in Nio.


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