Tesla's Shanghai plant to roll out 500,000 vehicles

US electric carmaker Tesla will set up a wholly owned factory in Shanghai, which will be the city’s largest foreign-invested manufacturing project.

With an annual capacity of 500,000 cars, the factory in Lingang in the Pudong New Area will be Tesla’s first Gigafactory outside the United States.

“The city government is pleased to have a strategic cooperation with Tesla,” Shanghai Mayor Ying Yong said yesterday at a ceremony, where the US company signed agreements with Shanghai Lingang Area Development Administration and Lingang Group.

“Shanghai welcomes Tesla to put its entire industry chain of research and development, manufacturing and sales of electric car in the city,” Ying said. “The government will fully support the construction of Tesla’s factory, and create a better business environment and provide better services for all types of enterprises, including Tesla,”

Tesla’s Chief Executive Elon Musk said the Shanghai plant will be a leading electric car factory which is expected to be a good example for sustainable development.

“I sincerely hope Tesla’s Gigafactory will be built as soon as possible and make contribution to Shanghai’s development,” he said.

As per the agreements, Shanghai will support Tesla’s development, including the establishment of Tesla (Shanghai) Co and its research and development unit.

The city government says it will promote innovation and accelerate the pace of development of high-end manufacturing. The city aims to turn itself into a leading automobile center.

Tesla (Shanghai) Co and Tesla (Shanghai) Electric Vehicle Research and Development Innovation Center were inaugurated yesterday.

The R&D center will mainly focus on innovation, research and development of electric cars and actively work to transform the technology and innovation into actual results.

Earlier this year, China abolished ownership limits for foreign companies on electric vehicle manufacturing plants.

In May, Tesla’s Hong Kong subsidiary set up Tesla (Shanghai) Co with a registered capital of 100 million yuan (US$15 million), according to the National Enterprise Credit Information Publicity System. The new company’s business scope includes technology development, service, consultation and transfer of electric cars, spare parts, batteries, energy-storage equipment and photovoltaic products.

Huang Weifang, an official from the Lingang Management Committee of the Pudong New Area, said the city government “is supportive on the innovation and development of new-energy vehicles and optimistic on Tesla’s development in China.”

Lingang area is already home to international brands such as MG Rover.

Tesla currently imports all the cars it sells in China from the US. The company ships more than 15,000 cars a year to China.

A factory in China will cut Tesla’s shipping and tariff costs while also meeting the demand of the world’s largest auto market.

In response to tariffs imposed by the US, China increased the import duty on US-made cars to 40 percent last week, forcing Tesla to raise the prices of its Model X and S cars by about 20 percent. Tesla’s Model S sedan now costs about 849,900 yuan, compared with 710,579 yuan in May. The price of its Model X sport-utility vehicle rose to about 927,200 yuan from 775,579 yuan.