Tesla Seeking To Construct Factory In China To Build Global Presence, Avoid Tariffs

Tesla CEO Elon Musk speaks during an event to launch the new Tesla Model X Crossover SUV on September 29, 2015 in Fremont, California. After several production delays, Elon Musk officially launched the much anticipated Tesla Model X Crossover SUV.
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Tesla Inc. is reportedly carrying out preparations for the construction of their first Chinese factory in Shanghai, reported Business Insider. According to sources and documents divulged by Reuters, bidding has already begun on the Shanghai Gigafactory and preparations are nearly complete.

The company made the decision to open a factory in China after foreign sales took a hit when China imposed U.S.-built car tariffs during President Donald Trump’s ongoing trade war. No longer one of the few companies manufacturing electric vehicles, Tesla began facing rising competition in China and was forced to search for alternative options in order to increase their presence in the world’s biggest auto market.

The company already has plans to begin producing the Model 3 mass-market car as soon as the second half of 2019.

Tesla, headed by Chief Executive Elon Musk, has been searching for construction bidders to build the plant and has reportedly already received a bid from state-owned Shanghai Construction Group Co. Ltd. The names of several other firms involved in the bidding were not released.

Shanghai Baoye Group Co. Ltd., a China Minmetals subsidiary, has also confirmed involvement in the project and is preparing for a shipment of concrete pipe piles and steel pile tips before the end of the year. The plant’s 860,000-square-meter site already has the external fence and groundwork nearly completed.

The Gigafactory would be the first car plant in China to be owned by a foreign company. The move is seen as progress in terms of U.S.-Sino relations and China’s willingness to expand their markets.

In an official statement, Shanghai’s Mayor Ying Yong commented that construction work on the factory would start soon and encouraged the builders to work quickly in order to begin production by the end of 2019.

He added that “it is necessary to further promote the ‘four new economy,’ intelligent manufacturing, industrial innovation, industrial strength, quality improvement and other series of projects to accelerate the development of Shanghai’s real economy.”

“It is [also] necessary to focus on the country’s major development strategy, fully support the construction of major projects in the strategic emerging industries, and strive to achieve early results. The industrial park should do a good job in regional overall planning, ensure good project access, and improve land use efficiency.”

The Chinese market is crucial for the electric vehicle industry, making Tesla’s decision to open a plant in China incredibly promising.