Tesla Working To Land $145 Million Plot For Gigafactory 3 In China

Tesla Supercharger station Shanghai, China

OCT 11 2018 BY WADE MALONE 19

Tesla is accelerating their plans for a factory in China

In order to expand their reach into China, Tesla announced a deal in July with the Shanghai authorities to build a new Gigafactory that will output up to 500,000 battery powered vehicles a year. Last quarter, Elon Musk said that the as little as $2 billion would be needed to achieve a 250,000 / year production rate at the Gigafactory 3.

The deal will reportedly help the automaker avoid costly import duties, gain access to government incentives, and avoid partnerships with Chinese automakers.

In September, Tesla increased the registered capital of Tesla (Shanghai) Co., Ltd. from 100 million yuan ($16.6 million) to 4.67 billion yuan ($680 million)The electric automaker plans to raise as much as $5 billion to invest in the Shanghai plant from local partners in China.

Due to escalating trade tension between the U.S. and China, the automaker is now accelerating their plans. Earlier this month, Tesla announced their reasoning for the faster pace moving into the country:

Taking ocean transport costs and import tariffs into account, Tesla is now operating at a 55% to 60% cost disadvantage compared to the exact same car locally produced in China. This makes for a challenging competitive environment, given that China is by far the largest market for electric vehicles. To address this issue, we are accelerating construction of our Shanghai factory, which we expect to be a capital efficient and rapid build-out, using many lessons learned from the Model 3 ramp in North America.

Bloomberg reports that Tesla is the sole bidder for a large plot of land that has an auction price of 1 billion yuan (about $145 million). The source of Bloomberg’s information asked not to be identified as the deal has not been made public yet.

If Bloomberg’s source is correct, a decision by the Shanghai government to allocate the land to Tesla could be made as soon as this month. Representatives for Tesla and the Shanghai government did not respond to Bloomberg for comment.

Source: Bloomberg

Categories: Tesla

Tags: , , , , ,

Leave a Reply

19 Comments on "Tesla Working To Land $145 Million Plot For Gigafactory 3 In China"

newest oldest most voted
Roy_H

Gigafactory that will output up to 500,000 batteries a year.
Good for about 100 cars/year 😉

Alaa Sadek

Hej Roy, you can make 100 cars from old laptop batteries. That is 500,000 cells. And you can do that in 7 days Roy.

antrik

The name “battery” actually implies it’s made up of several cells. 500,000 batteries are good for 500,000 cars, even if each one contains several thousand cells.

Pushmi-Pullyu

Thank you. #GrammarNazi

Miggy

How will this work with the trade war between the USA and China ?

Pushmi-Pullyu

Stay tuned for the next thrilling chapter in our soap opera, “As the Wheels Revolve, or What’s a South-African-Canadian-American Billionaire Entrepreneur-Inventor Rocket Scientist Visionary Futurist to Do?”

(And… what about Naomi?) 😉

fasterthanonecanimagine

Interesting question. Two guesses, maybe a combination of both: (1) Tesla can stop producing cars for China in the US & (2) Tesla can produce cars in China so much cheaper that they might be able to export them to the USA despite TTT. I just couldn’t figure out yet, in which country this will create Jobs. [TTT = Trump’s Tariff Tax]

Ron M

I suspect the China GF will produce cars for China all of Asia plus Australia / New Zealand.

Benz

“Bloomberg reports that Tesla is the sole bidder for a large plot of land that has an auction price of 1 billion yuan (about $145 million).”

Details regarding the actual size of this “large plot of land” will be revealed soon, I guess?

Pushmi-Pullyu

“…we are accelerating construction of our Shanghai factory, which we expect to be a capital efficient and rapid build-out, using many lessons learned from the Model 3 ramp in North America.”

I’m moving from merely thinking it’s faintly possible that Tesla will build an “assembly line inside a tent” to fast-start production in China, building cars while waiting for the factory to be built… to thinking that’s what Tesla actually intends to do.

Building a (partial) assembly line inside a tent to increase Model 3 production is, perhaps, one of what Tesla’s press release calls “many lessons learned”.

I doubt that everything can be done under a tent; surely the paint shop, and the wash station leading to the paint shop, needs to be inside airtight rooms? But that sort of thing could be done in an existing smaller factory rented for the purpose, or perhaps inside a hastily built temporary structure with airtight walls.

Interesting times ahead. 🙂

robus

Whilst final assembly could be done in a tent, you’re forgetting about the hydraulic stamping machines which need a proper structure to house them. So it will most likely be a combination.

Pushmi-Pullyu

That’s an excellent point, thanks.

If I understand what I’ve read, those actually extend a level below floor level. That would indicate they have to excavate a hole to put them in, so they definitely would not want to move them once installed.

I suppose the workaround would be to stamp out the body pieces elsewhere, and ship them in?

Ron M

I actually think it’s a brilliant idea, instead of having workers, engineers etc that will be needed during the construction phase renting trailers for workers to work from build the tent first for those workers which can be used until parts of the building is enclosed. Then the tent can be used for other things. My only concern would be typhoons and how vulnerable this location is to potential typhoons.

Pushmi-Pullyu

Yeah, typhoons. That was one of the reasons why I rejected the idea at first. But perhaps those who say this sort of sprung structure should not be dismissed as a mere “tent”, have a point?

ModernMarvelFan

Tenting works for a fairly mild weather and relatively dry area of Fremont. But try that in the relatively humid Shanghai delta area is going to create a long list of problems.

Not to mention that Shanghai can get large storms where the relatively dry summer of N. California completely shield Fremont from worrying about it.

NZ Prof

Things are built so fast in China that they can put up an actual warehouse in a few weeks. So need for tents etc.