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Breaking News — Tesla Seals The Deal For Gigafactory 3 In China

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Published on October 17th, 2018 |

by Steve Hanley

Breaking News — Tesla Seals The Deal For Gigafactory 3 In China

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October 17th, 2018 by Steve Hanley

It’s official. Tesla has acquired just under 1300 acres of land in the Shanghai Lingang Equipment Industrial Zone for its Gigafactory 3. The factory is expected to cover about 1200 of those acres. The official signing ceremony for the transfer of land to Tesla took place in China on October 17, today.

Tesla is pushing hard to get the Gigafactory 3 project moving forward. Thanks to the tit for tat trade war initiated by the current US president and his crack team of economic advisers, Tesla cars manufactured in America now must pay an import tariff of 40%, making it hard for them to compete against locally produced automobiles. Cars built in the new factory outside Shanghai will be exempt from that tariff.

Tesla plans to be a major force in the Chinese new car market, especially as China institutes its latest EV policy starting January 1, 2019. After that date, every manufacturer building cars in the country will be required to produce a certain percentage of electric cars, known locally as new energy vehicles. Battery electric cars will get the most credits under the system. Plug-in hybrids will get a smaller credits.

Companies who wish to continue building cars with gasoline or diesel engines will be required to buy credits in order to do so. That will raise the selling price of those cars, making new energy vehicles more competitive in the marketplace.

Last month, Tesla began advertising numerous jobs for construction workers to help build the new factory, which is expected to have a capacity of 500,000 vehicles a year. Tesla expects the factory to begin producing cars in fewer than 2 years time — an incredibly short ramp up from breaking ground on the factory to getting cars rolling off the assembly line and into the hands of customers. But when have short timelines ever been a problem for Tesla?

It reportedly has increased the funding committed to the Gigafactory 3 project to $681 million. And as Vincent indicates on Twitter, local banks in the Shanghai area are actively engaged in lining up the additional funding needed to build GF3.

With the biggest new car market in the world, China is an important market for Tesla. Just how important is indicated by the fact that it is moving forward aggressively with plans for a Chinese factory before committing to a factory in Europe. Check out this video from the World Economic Forum on the rosy prospects for electric cars in China:

Check out more Tesla China news if this isn’t enough for you.

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About the Author

Steve Hanley Steve writes about the interface between technology and sustainability from his home in Rhode Island and anywhere else the Singularity may take him. His muse is Charles Kuralt — “I see the road ahead is turning. I wonder what's around the bend?”

You can follow him on Google + and on Twitter.

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Tesla buys new plot for its first China factory

Source: Shanghai Municipal People's Government
Shanghai Mayor Ying Yong and Tesla Chairman and CEO Elon Musk pose in from of a plaque for the Tesla (Shanghai) Ltd. Electric Vehicle Development and Innovation Center.

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.

—CNBC's Robert Ferris contributed to this report.

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Shares of Chinese electric car maker Nio rally after Tesla investor takes stake

Top Tesla investor takes stake in Chinese electric carmaker Nio
4:46 PM ET Tue, 9 Oct 2018 | 03:02

Shares of Chinese electric car maker Nio surged more than 13 percent in Wednesday's premarket following reports that Tesla investor Baillie Gifford has acquired an 11.4 percent stake in the company.

Reports of the investment had send shares up 22 percent on Tuesday.

The U.K. investment management firm owns 85.3 million Nio shares, the company said Tuesday in a filing with the Securities and Exchange Commission.

The Baillie Gifford management firm is Tesla's largest outside shareholder, with a 9 percent stake. Tesla's largest investor is CEO Elon Musk, who owns about 20 percent of shares.

Nio's stock closed up 22 percent Tuesday at $7.39. Since Nio shares began trading on Sept. 12, the stock has traded as high as $13.80 and as low as $5.35. When it listed its shares on the New York Stock Exchange last month, the company said it plans to make cars for the Chinese market initially, but it also has ambitions to expand into Europe and the U.S.

Chinese electric car company Nio makes its Wall Street debut
12:44 PM ET Wed, 12 Sept 2018 | 03:40

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