Tesla, smart­ing from trade war, seeks bids for China Gi­gafac­tory con­struc­tion

Financial Chronicle - - PLAN, POLICY - YILEI SUN & ADAM JOURDAN

Tesla Inc has opened a ten­der process to build its Shang­hai Gi­gafac­tory and at least one con­trac­tor has started buy­ing ma­te­ri­als, ac­cord­ing to sources and doc­u­ments re­viewed by Reuters, the clear­est in­di­ca­tion that con­struc­tion is im­mi­nent.

The de­tails, pre­vi­ously un­re­ported, re­veal that state-owned Shang­hai Con­struc­tion Group Co Ltd is tak­ing part in the bid­ding while a unit of China Min­metals Corp Ltd is pre­par­ing ma­te­ri­als for the plant’s foun­da­tions.

The $2 bil­lion fac­tory, Tesla’s first in China, is a ma­jor bet for the US elec­tric ve­hi­cle (EV) maker as it looks to bol­ster its pres­ence in the world’s big­gest auto mar­ket where its earn­ings have been hit by in­creased tar­iffs on US im­ports.

The so-called Gi­gafac­tory would also be China’s first wholly for­eign-owned car plant, whose progress is widely seen as a re­flec­tion of Sino-US re­la­tions and also the de­gree to which China is open­ing up its mar­kets.

Tesla, led by bil­lion­aire Chief Ex­ec­u­tive Elon Musk, has be­gun seek­ing bids from com­pa­nies look­ing to build the plant, ac­cord­ing to two peo­ple with knowl­edge of the mat­ter and a con­struc­tion doc­u­ment on an of­fi­cial lo­cal bid­ding plat­form.

Shang­hai Con­struc­tion Group is among sev­eral firms bid­ding, the two peo­ple said, de­clin­ing to be iden­ti­fied be­cause the in­for­ma­tion was not pub­lic.

Shang­hai Baoye Group Co Ltd, a China Min­metals sub­sidiary, is pre­par­ing for the de­liv­ery of a large amount of con­crete pipe piles and steel pile tips in the sec­ond half of De­cem­ber, showed a doc­u­ment on the me­tals gi­ant’s web­site.

Tesla de­clined to com­ment. Shang­hai Con­struc­tion Group did not re­spond to a re­quest for com­ment. An of­fi­cial at Baoye par­ent China Me­tal­lur­gi­cal Group Corp [CNMET.UL], a Min­metals firm, con­firmed in­volve­ment.

Work­ing late

Tesla is fac­ing ris­ing com­pe­ti­tion in China from a swathe of do­mes­tic EV mak­ers. Its sales tum­bled after China raised tar­iffs on US-built cars, prompt­ing the au­tomaker to cut prices to keep its mod­els af­ford­able.

In moves which would fur­ther lower prices, the au­tomaker has said it aims to pro­duce its Model 3 mass-mar­ket car from 2019 at the new plant - Tesla’s first Gi­gafac­tory out­side of the United States - and lo­calise its man­u­fac­tur­ing and sup­ply chain.

Shang­hai’s gov­ern­ment, in a state­ment on its of­fi­cial WeChat late on Wed­nes­day, said Mayor Ying Yong had vis­ited the site of the Gi­gafac­tory and that prepa­ra­tion work was nearly com­plete and con­struc­tion would start soon.

Ying urged the firm to “ac­cel­er­ate” work on the fac­tory and said pro­duc­tion would start to some de­gree in the sec­ond half of next year, the state­ment showed.

A mem­ber of the com­mu­nity at Lin­gang near the plant’s 860,000 square me­ter site, which Tesla se­cured in Oc­to­ber, said work on ground prepa­ra­tion and fenc­ing ap­peared nearly com­plete.

“Work­ers work very hard on this,” the per­son said. “Some­times they work un­til 10 pm at nigh

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