Tesla's Gigafactory

Tesla Inc, the electric car-maker has broken the ground for the Shanghai Gigafactory of the company on Monday.

It is at this factory where the company is planning to commence the production of the Model 3 electric vehicles by the end of the year.

This is the first step by Tesla in the plan of the company in localizing its production in China which is the largest auto market in the company.

So as to formally commence the construction of the factory, the Chief Executive of Tesla, Elon Musk had joined the mayor of the city along with the other officials of the local government for a ceremony at the site of the factory which is located at the outskirts of Shanghai.

According to the company, this factory will cost about $2 billion to the company.

The Chief Executive of Tesla, Elon Musk had stated at the event at with the resources that are available in China, the company feels that it will be able to construct the Gigafactory of Shanghai in record time.

The headquarter of Tesla Inc
Source: Business Insider

He further added that the company is looking forward to having some initial production of its Model 3 by year end and then achieving the volume production in the next year.

The Gigafactory at Shanghai

This Gigafactory is going to be the first car plant which will be wholly foreign owned.

This act is a reflection of the broader shift in China’s policy by opening up the car market of the country to the foreign traders despite the on-going trade war  with the United States.

In the trade war the car market of China had witnessed an increase in the tariffs on the cars that were imported from the United States.

Model 3 of Tesla which will be manufactured in the Gigafactory
Source: Tesla

Plans of the company

The company has the plan to minimize this impact of trade war by producing the cars locally. The trade war has forced the car maker to adjust the prices in China of all its cars which are made in the United States.

By doing so, the company will also keep a check on the prices. This will then fend off the competition from the start-ups which include names like Nio Inc, Byton as well as XPeng Motors.

After the event, Musk tweeted that the affordable cars must be manufactured on the same continent where its customers are.

In July, the tariffs on the import of cars of the United States were increased by 40 percent by China. However, it was declined to 15 percent at the beginning of the year because of the ceasefire of the trade war.

Source: Reuters, BBC News

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