Elon Musk says Tesla's Shanghai factory is 'groundbreaking'

Elon Musk says Tesla's Shanghai factory is 'groundbreaking'

"We think with the resources here we can build the Shanghai Gigafactory in record time and we're looking forward to hopefully having some initial production of the Model 3 towards the end of this year and achieving volume production next year", Musk said at the ground breaking ceremony.

The $2 billion factory - long under discussion - marks a major bet by the USA electric vehicle maker as it looks to bolster its presence in the world's biggest auto market, where it faces rising competition from a swathe of domestic rivals and its sales have been hit by increased tariffs on U.S. imports.

He said that high-volume production of the Model 3 cars is expected to begin in the factory in 2020. "This week, we've started taking online orders for Model 3 in China, so that customers can configure their vehicle to take delivery in the weeks ahead, and Gigafactory 3 is another example of Tesla's commitment to the China market".

The speed in which the US$5 billion project has taken off underscores China's pressing need to bring to bear mega foreign invested projects as the country grapples with its slowest economic growth in a decade.

Tesla's factory in China - the world's biggest auto market - will be its first outside the US.

The electric vehicle company welcomed the developments after enduring a series of gaffes and an Federal Bureau of Investigation probe on allegations Mr. Musk had deceived company investors. Tesla officials in China declined to comment.

Shares in Chinese suppliers to Tesla, including Tianjin Motor Dies Co Ltd and VT Industrial Technology Co Ltd, rallied on Monday after Musk's tweets.

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Until now, foreign automakers that wanted to manufacture in China were required to work through state-owned partners.

A clutch of mainland electric auto start-ups such as Nio and Xpeng Motors are revving up production and development of their own models to woo local customers, taking advantage of the government's heavy subsidies to bolster sales of NEVs as a way of protecting the environment. The lower tariff will last until the end of March pending trade talks.

Tesla's plans come as China's economy faces a slowdown - something Apple said has contributed to concerns it is going to miss its quarterly revenue target.

Trade war aside, the carmaker is building the plant in an auto market that likely contracted a year ago for the first time in decades.

The Shanghai-based Gigafactory should produce roughly 500,000 vehicles per year, much higher than most manufacturing plants producing from 200,000 to 300,000 units per year.

"And the competition is getting more and more fierce".

Tesla purchased the land for the Shanghai factory just outside the city for approximately $140 million in October.

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