Tesla boss Elon Musk presided Monday over the ground-breaking for a Shanghai factory that will allow the electric-car manufacturer to dodge the China-US tariff crossfire and sell directly to the world's biggest market for "green" vehicles.
Tesla's own prices have fluctuated dramatically, with the Company cutting prices several times a year ago, even after China increased tariffs on imported US vehicles, as per CNN.
The Tesla factory, which will be built with an investment of over 50 billion yuan (USD seven billion), is the largest foreign-invested manufacturing project in Shanghai's history, state-run Xinhua news agency reported. The U.S. Securities and Exchange Commission moved to punish Tesla a year ago after his infamous "funding secured" tweet, with fines and a settlement that required corporate governance reforms.
The so-called Gigafactory is China's first wholly foreign-owned auto plant, a reflection of China's broader shift to open up its vehicle market, even amid a trade war with the United States which has seen a rise in tariffs on cars imported from the U.S. The company wants to take advantage of demand for electric vehicles in the world's biggest auto market.
Tesla unveiled its first Gigafactory in 2016, which was initially a "tent" production facility in the Nevada desert.
Having control isn't likely to free Tesla from China's onerous bureaucracy nor safeguard its intellectual property, Mr. Russo warned.
Trade war aside, the carmaker is building the plant in an auto market that likely contracted previous year for the first time in decades. And while it remains to be seen what the Gigafactory's production numbers look like by the end of the year, the factory reportedly has a maximum production capacity of 500,000 units per year.
Tesla, based on Palo Alto, California, global automakers including General Motors Co., Volkswagen AG and Nissan Motor Corp. that are pouring billions of dollars into manufacturing electric vehicles in China.
Tesla is eager to get the factory up and running as soon as possible so it can begin constructing select models locally. In October, it said it paid about $140 million to secure more than 200 acres of land for the planned Gigafactory 3.