Tesla May Invest Billions Into Factory In China
Shangai may be the new top choice for Tesla Motor Co. to build another electric vehicle factory. It is being reported that the company is planning to invest $9 billion and has signed a a non-binding memorandum with Jinqiao Group. Bloomberg reported:
Jinqiao Group, a Shanghai government-owned company, has signed a non-binding memorandum of understanding with Tesla on building its production facilities in the municipality, said the person, who asked not to be identified because the negotiations are private. Each party may invest about 30 billion yuan ($4.5 billion) in the partnership, with Jinqiao putting up land for most of its share, the person said.
The report only referenced the one source that will not be identified. Tesla hasn’t commented on the deal and nothing official has come from sources at the Jinqiao Group or the Chinese government. There have been other reports that Tesla has been visiting the area and is in talks with possible partners.
Tesla CEO Elon Musk spoke recently about the plans to find a location and a partner for a plant in China by the middle of this year. Tesla VP For Global Sales And Service, Jon McNeill also spoke of the plans. Nothing official was revealed, but it seems there is forward movement now.
Musk stated previously that a factory in China, while being large scale, would only be utilized to meet local demands. Local demands should prove to be huge though as China is the largest auto market on the planet and the second largest in terms of Tesla Model 3 reservations. China mandates that if a company wants to come in and manufacture in the country and avoid the 25 percent import tax, a local partnership is required.
Enormous factories are part of Tesla’s facade. The Tesla Gigafactory will have the biggest building footprint on Earth at 13 million square feet. The Fremont Factory, at 5.3 million total sq. ft. is one of the largest buildings in the world. Rarely mentioned are Tesla’s “smaller” factories. The Tilburg, Netherlands final assembly factory is one example and is barely small at 840,000 sq. ft.
In another report . . .
Reuters looked into the information provided by Bloomberg and has just reported:
A Shanghai company denied a report that its controlling shareholder signed a non-binding agreement with Tesla Motors Inc to build a factory in Shanghai, according to the firm’s exchange filings.
Shanghai Jinqiao Export Processing Zone Development Co said its parent company Jinqiao Group had not signed an agreement of any kind with the U.S. automaker, in response to a Bloomberg report that the two sides had signed a memorandum of understanding.
It is important to note that Bloomberg didn’t have any “official” verified information, and no where did it say that anything other than a non-binding memo was referenced. Although the companies aren’t committing to the public yet, it is becoming more clear that Tesla is actively in process to follow through with movement into China as soon as possible.