Tesla Inc. (TSLA)
plans to start production in China from H2-2019, the city of Shanghai said, as
the company prepares to capture a greater share of the world’s largest auto
market.
Shanghai’s mayor Ying Yong has visited the project’s site spread
over 200 acres in Lingang development zone in southeastern Shanghai which will
house the Gigafactory 3. This will be
Tesla’s first overseas plant. The project will allow Tesla to bypass the 40%
tariff China levies on US cars while also avoiding any additional negative
impact of a trade war. It will also allow Tesla to compete more effectively
against Chinese electric vehicle makers, such as BYD Co. The factory will also
double the size of Tesla’s global manufacturing.
Tesla may borrow $1.3 billion from Chinese banks to fund the
facility, as per RBC Capital Markets analyst Joe Spak. Tesla has previously
said that it will tap into the debt market to build the Chinese factory which could
cost around $2 billion.
