Tesla all set to start pro­duc­tion in China by se­cond half of 2019

The Star Late Edition - - BR - JING JIN AND VILLE HEISKANEN

TESLA Inc plans to start pro­duc­tion in China in the se­cond half of next year, the city of Shang­hai said, as the US elec­tric-car maker ad­vances its push into the world’s largest car mar­ket.

The mayor of the city, Ying Yong, vis­ited the project site in the Lin­gang de­vel­op­ment zone in south-eastern Shang­hai and en­cour­aged Tesla to ac­cel­er­ate con­struc­tion, ac­cord­ing to a state­ment on the city’s WeChat so­cial me­dia ac­count yes­ter­day.

The plant, dubbed Gi­gafac­tory 3, will be the big­gest-ever for­eign-in­vested man­u­fac­tur­ing project in Shang­hai.

A Tesla rep­re­sen­ta­tive didn’t have an im­me­di­ate com­ment.

The Palo Alto, Cal­i­for­nia-based com­pany has se­cured more than 200 acres of land for the China fac­tory, which is ex­pected to cost sev­eral bil­lion dol­lars to build.

Tesla’s first over­seas plant will help the elec­tric-car maker avoid some of the risks in­volved with im­port­ing ve­hi­cles, such as higher tar­iffs caused by the trade ten­sions be­tween China and the US.

While China is Tesla’s big­gest mar­ket af­ter the US, vol­umes in the coun­try have been lim­ited, be­cause the com­pany has had to rely on im­ports.

The 40 per­cent duty that China levies on cars brought from the US has had an im­pact on sales, the com­pany said when re­port­ing third-quar­ter earn­ings in Oc­to­ber.

The tar­iff has left Tesla’s mod­els at a pric­ing dis­ad­van­tage against lo­cal elec­tric-car ri­vals such as BYD Com­pany, while new Chi­nese en­trants in­clud­ing NIO Inc and Xpeng Mo­tors are also rac­ing to win over cus­tomers be­fore Tesla starts its full-scale push in the coun­try.

At the same time, the Chi­nese car mar­ket is headed for its first drop in at least two decades as eco­nomic head­winds, the trade war with the US and slump­ing stock prices weigh on con­sumers’ ap­petite to buy new ve­hi­cles.

New-en­ergy ve­hi­cles – which in­clude bat­tery-pow­ered, plug-in hy­brid and fuel-cell au­to­mo­biles – are buck­ing the trend. Sales of these mod­els reached 777 000 units last year and could sur­pass 1 mil­lion in 2018, ac­cord­ing to the China As­so­ci­a­tion of Au­to­mo­bile Man­u­fac­tur­ers. The gov­ern­ment’s tar­get is 7 mil­lion ve­hi­cles a year by 2025. | Bloomberg

YILEI SUN

A GOV­ERN­MENT an­nounce­ment of a land re­quest is seen on a fence on the land se­cured by Tesla for its Gi­gafac­tory in Shang­hai, China. | Reuters

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