Shanghai Tesla Factory Key to CEO Elon Musk’s Ambitions

Tesla
A significant amount of progress has been made on Tesla's new factory in China. (Qilai Shen/Bloomberg News)

Three months after groundbreaking, Tesla Inc. is rushing to complete its multibillion-dollar factory on the outskirts of Shanghai to capitalize on growing demand in the world’s largest electric car market.

Foundations for the facility have been laid, and construction workers are erecting walls and other structures for the factory, which eventually could rival production from its U.S. assembly plant. Tesla broke ground at the 210-acre “Gigafactory 3” site, its first outside the United States, in January.

Founder Elon Musk said last week that production in Shanghai could reach a rate of 2,000 vehicles a week by the end of the year. A Shanghai government official said in March that he expected the factory’s assembly shop to be completed in May.

The factory will help Tesla to avoid the current 15% tariff on imported cars from the United States, making its pricing more competitive against local brands.



The need for Tesla to expand beyond its home market of the United States was highlighted by the earnings it reported April 24, with first-quarter results missing analysts’ projections. The halving of a federal tax incentive for Tesla purchases starting in January dragged on U.S. demand in the quarter, and Tesla struggled to offset that drop by starting deliveries of the Model 3 in Europe and China.