Tesla secures 1,200-acre plot for first overseas Gigafactory
What's the story
In a new development, Tesla has secured 1,200 acres of land (approximately 860,000 square meters) in Shanghai to set up its first overseas Gigafactory. The move, announced via Tesla's WeChat account, will help the company establish its footprint in China - the biggest market in the world for electric vehicles - by manufacturing vehicles locally and bringing down their prices. Here's more.
Agreement details
Land transfer agreement signed, construction to follow
On October 17, Tesla and officials from the Shanghai Planning and Land Resources Administration signed a land transfer contract. The move officially secures land for the factory, which will be constructed at an approximate cost of $2bn, Reuters reported. The factory, when ready, would double Tesla's global manufacturing capacity by producing around 500,000 cars every year.
Quote
Statement from Robin Ren, VP of worldwide sales at Tesla
"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," Ren, VP of worldwide sales at Tesla, said.
Cost issues
Construction 'accelerated' due to high import tariff
Tesla has been 'accelerating' the construction of its Gigafactory in a bid to bring down the cost of its vehicles in the country. Currently, the company has to pay 40% tariff on the vehicles it imports into China, which increases their prices. However, local manufacturing could easily cut prices by a factor of three. Notably, Tesla has also started hiring for the new factory.
Information
Cost of securing the land
Though Tesla hasn't revealed how much it paid for securing the Shanghai site, Chinese officials said it had been auctioned at a price of 973 million yuan (approximately $140.51 million).