The California-based carmaker Tesla has reportedly acquired a 864,885 square meters plot for its new factory in Lingang area, Shanghai. As per trusted sources, the construction of Tesla’s wholly-owned factory was initially announced in July.
The carmaker expects the factory to manufacture its first cars in the next three years, stated an earnings release in August. The factory will initially have the capacity for approximately 250,000 vehicles and battery packs a year, but plans to gradually double the same.
The release further states that the funding for the factory will primarily come from local debt, and Tesla’s own investments will not commence in any major way until 2019, the company stated in its August release.
According to sources familiar with the development, manufacturing cars in China, which is the world’s biggest market for electric vehicles, will substantially lower costs for Tesla.
In a report from October 2, the company mentioned that it is not eligible for the same cash incentives as local Chinese manufacturers. Moreover, overall costs for ocean transport and tariffs mean the automaker is running operations at a cost disadvantage of 55 percent to 60 percent as compared to a domestic equivalent.
Incidentally, Shanghai-based automobile manufacturer, Nio alias ‘Tesla of China’ reportedly went public in the U.S. in September and recently, beat its own production target for the fiscal third quarter by several hundred vehicles. Earlier, Baillie Gifford, the biggest outside investor of Tesla, revealed to have acquired an 11.4 percent stake in Nio, reported sources.
For the record, the factory’s site is located by the coast nearly 47 miles southeast of the center of Shanghai or approximately a two-hour subway ride away. The location is said to have facilitated several automobile manufacturers with foreign ties, and one can often witness unmarked test vehicles roaming on the streets.
Financial details related to the acquisition haven’t been disclosed yet, cite sources.