Tesla eyes new fac­tory in Shang­hai

China Daily (USA) - - FRONT PAGE -

Tesla Inc is in the process of ob­tain­ing land in Shang­hai for its first fac­tory out­side the United States, ac­cord­ing to peo­ple with direct knowl­edge of the mat­ter, as it pushes ahead with plans to set up pro­duc­tion in China.

The au­tomaker is the sole bid­der for a plot of land with an auc­tion price of around 1 bil­lion yuan ($145 mil­lion), the peo­ple said, ask­ing not to be iden­ti­fied as the in­for­ma­tion is not pub­lic. A de­ci­sion by the Shang­hai mu­nic­i­pal gov­ern­ment to al­lo­cate the land to Tesla could be made as soon as this month, they said.

In July, Tesla reached a pre­lim­i­nary agree­ment with the Shang­hai au­thor­i­ties to build a fac­tory that the elec­tric-car pioneer said will even­tu­ally pro­duce 500,000 bat­tery-pow­ered ve­hi­cles an­nu­ally, more than what its lone US as­sem­bly plant has made.

Set­ting up man­u­fac­tur­ing in China will en­able the Palo Alto, Cal­i­for­nia-based com­pany to avoid pay­ing im­port du­ties as high as 40 per­cent and of­fer cheaper cars in the world’s big­gest mar­ket for elec­tric ve­hi­cles.

The car­maker is con­sid­er­ing rais­ing some of the $5 bil­lion it in­tends to in­vest in the plant near Shang­hai from lo­cal part­ners, Bloomberg re­ported on Aug 1, cit­ing a per­son fa­mil­iar with the plans.

Tesla CEO Elon Musk told an­a­lysts on an earn­ings call that he ex­pected it would take about $2 bil­lion worth of in­vest­ment for the fac­tory to be able to pro­duce around 250,000 ve­hi­cles a year.

Tesla signed a mem­o­ran­dum of un­der­stand­ing with the Shang­hai mu­nic­i­pal gov­ern­ment on July 10 to set up a fac­tory in the eastern part of Shang­hai, which is the first of its kind out­side the US.

Ac­cord­ing to the MoU, the fac­tory will have an an­nual out­put of 500,000 ve­hi­cles. Tesla will also com­bine the func­tions of re­search and devel­op­ment depart­ment, man­u­fac­tur­ing, sales and an elec­tric ve­hi­cle in­no­va­tion cen­ter.

Huang Ou, deputy di­rec­tor of Shang­hai Mu­nic­i­pal Com­mis­sion of Econ­omy and In­for­ma­tion Tech­nol­ogy, said at a news con­fer­ence in July that the Tesla fac­tory would be the largest for­eign-in­vested man­u­fac­tur­ing pro­ject in Shang­hai so far.

But as to the pos­si­ble tech­nol­ogy trans­fers, Huang said these should be left to the re­lated com­pa­nies to de­cide.

PRO­VIDED TO CHINA DAILY

A Tesla Model X is dis­played at an in­ter­na­tional auto show in Pudong, Shang­hai, on Sept 28.

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