Tesla secures 210-acre site for factory in Shanghai

A factory would help Tesla compete with cheaper local electric vehicles.

Megan Geuss – Oct 17, 2018 10:06 am | 129

A Tesla car is charging at a Tesla electric vehicle charging station in front of Baolong building on July 15, 2018 in Beijing, China. Credit: Photo by VCG / Getty Images

On Wednesday, Tesla announced that it had secured a long-term lease to a 210-acre site in Shanghai, China, where it will begin building a second battery and auto factory.

According to the Wall Street Journal, Robin Ren, Tesla’s vice president of worldwide sales, attended a signing ceremony in Shanghai today, stating, “Securing this site in Shanghai, Tesla’s first Gigafactory outside of the United States, is an important milestone for what will be our next advanced, sustainably developed manufacturing site.”

A Shanghai government website tracking major land acquisitions in the city detailed a purchase in the eastern Lingang district for about $140 million, which likely reflects Tesla’s latest acquisition.

Last year, reports circulated that Tesla was in talks with the Shanghai government to build a factory in the city’s “free trade zone.” The Lingang district is within that zone. Putting its factory there would allow Tesla to wholly own its factory while avoiding some import tariffs, which could escalate as a result of the Trump Administration’s ongoing tariff disputes with China.

China moved to ease some rules relating to auto imports this spring, permitting some automakers to own factories in the country without the traditional 50 percent government ownership. In July, Tesla CEO Elon Musk traveled to Shanghai and signed an agreement to build a factory that would churn out 500,000 vehicles per year. The WSJ notes that Tesla sold about 17,000 vehicles in China in 2017, but without a Chinese factory, the imported Teslas cost as much as 60 percent more than what comparable electric vehicles in China cost.

In July, Tesla told Ars that after obtaining the proper permits, it would take two years to start producing vehicles and another two to three years until the Shanghai Gigafactory is producing 500,000 vehicles per year. Still, 210 acres is much smaller than Tesla’s current Fremont plant, which sits on 370 acres.

In Tesla’s second quarter financial call this August, Musk said that Tesla wouldn’t raise any money through equity to build the factory and would instead finance the build through local Chinese banks. On that call, Musk optimistically said that he believed Tesla could build the massive factory for around $2 billion, or less than the cost of the Nevada Gigafactory. The factory “would include battery module and pack production, body shop, paint shop, and internal assembly,” the CEO said in August. Ars has reached out to Tesla for comment on whether all those components will still be included in the current factory plan, and we will update if we receive a response.

Correction: This story has been updated to reflect that land in China is leased from the government on a long-term basis.