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article imageTesla moves ahead with building factory in Shanghai, China

By Karen Graham     Oct 20, 2018 in Business
On Wednesday, Tesla announced it had signed a "land transfer" agreement with the Shanghai government for a 212-acre plot to build its proposed Chinese factory, opening the way to begin construction of its first factory outside the U.S.
The deal to build a Tesla factory in China was originally signed in July, according to Digital Journal, and the hold up was due to finding a big enough plot of land to accommodate the vertically-integrated factory.
The Shanghai Bureau of Planning and Land Resources reported the 860,000 square meters (212.5 acres) plot of land was sold at auction for 973 million yuan ($140.5 million).
The deal is a step forward in Tesla's ability to make cars locally for the Chinese market. Tesla will still be subject to Chinese tariffs because the factory will be located in a free-trade zone, but the location will give the electric car company access to cheaper labor and parts supplies to help lower prices.
“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,” Robin Ren, Tesla’s vice president of worldwide sales, said in a statement.
The first vehicles will roll off the line within roughly two years, a Tesla spokesman said in an email, reports Bloomberg. It will take about two or three years before the facility reaches its capacity of 500,000 vehicles a year.
China has raised its import duties on American vehicles an additional 15 percent in response to Trump's additional tariffs. But the move by Tesla is not a spur-of-the-moment venture. Musk had been talking about building a plant in China for some time.
Tesla has already started hiring for the factory, even though construction has not yet started. The factory is expected to cost about $2.0 billion and funding is being sourced from the Chinese debt market. "Hopefully, this source will be a bit more secure than the funds that CEO Elon Musk said were in place to take the company private," according to CNET.
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