Published: Tue, January 08, 2019
Money | By Ralph Mccoy

Tesla to break ground on Shanghai plant as trade war lingers

Tesla to break ground on Shanghai plant as trade war lingers

Tesla (TSLA) has broken ground on a Shanghai, China, factory - the first plant outside the USA for the electric auto manufacturer. He was in Shanghai for the ground-breaking ceremony.

"This will be the most advanced Tesla gigafactory.With resources here, we are able to build this factory in record time, and we are hoping to have initial production of Tesla Model 3 toward the end of the year and volume production next year", 47-year-old Musk said.

But Tesla has said its Shanghai plant will be "wholly-owned" by the company.

The Shanghai government later posted photos on social media showing Musk and officials from Tesla and the city on a large stage at a launch ceremony at the site, located on Shanghai's distant outskirts.

China-based manufacturing will help avoid sanctions from the Chinese government amid the US-China trade war, where the US imposed 25 percent import tariffs on steel and 10 percent on aluminium, and China slapped US exports with matching retaliatory sanctions. The China gigafactory could significantly reduce costs - from transpacific transit and tariffs - for Tesla in a booming local market for electric cars.

The first of the new electric models being developed by global automakers to hit the market, Nissan's Sylphy Zero Emission, began rolling off a production line in southern China in August.

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Model 3, for example, which starts at a price of Dollars 35,000 in the U.S. market, is sold between 500,000 yuan and 560,000 yuan (around USD 72,980 and USD 81,738) in China.

The firm in July unveiled plans for what is Musk's biggest overseas move yet, saying the factory's eventual annual production of 500,000 vehicles would dramatically increase its output and allow more direct access to the world's biggest electric-vehicle (EV) market.

The said the plant will produce "affordable versions" of the Model 3 and Model Y, while more expensive versions, such as the Model 3 Performance, along with the Model S and Model X will continue to be produced at the company's main factory in Fremont, California, and exported to China.

Tesla's plans come as China's economy faces a slowdown - something Apple said has contributed to concerns it is going to miss its quarterly revenue target.

"Looking forward to visiting soon for the groundbreaking of Gigafactory Shanghai!".

Shares in Chinese suppliers to Tesla, including Tianjin Motor Dies Co Ltd and VT Industrial Technology Co Ltd, rallied on Monday after Musk's tweets. He said production would start to some degree in the second half of 2019.

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