Electric car maker Tesla has decided upon the location of its third Gigafactory, and has acquired the right to about 210 acres of land in Lingang, Shanghai. The company is now planning to use the land to construct its first factory outside the United States.
The announcement was made on Wednesday, when Tesla executives, leaders of the Shanghai Economics and Information Committee, Shanghai Lingang Area Development Administration and the Shanghai Lingang Group, all came together for an agreement signing ceremony.
Speaking about the development, Robin Ren, Tesla’s vice president of Worldwide Sales said:
Tesla’s mission is to accelerate the world’s transition to sustainable energy not only through all-electric vehicles, but also scalable clean energy generation and storage products. 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
With this, Tesla not only hopes to bring down manufacturing costs, but also gain other material advantages when it comes to selling its electric vehicles in the country. The Gigafactory 3, which will be built on the 210-acre stretch received by the company, will allow it to bypass certain tariffs, as well as shipping costs. China is an important market, and has huge potential for something as novel as electric cars. As such, Tesla’s decision to build a gigantic manufacturing facility right within the heart of the country, is pretty smart
With this, the company will also receive access to cash incentives that are only available to locally produced electric vehicles, a category Tesla will fall in once its Gigafactory 3 is up and running. Meanwhile, the facility is expected to produce 500,000 electric vehicles a year at full capacity. However, Tesla has said that it will take 2-3 years to construct it, and another 2-3 years to get it running at full potential.
At present, it appears that the car made in this facility will be sold within the Chinese market, however, cheaper manufacturing costs in China would make sense for Tesla to further expand capacity and start exporting cars as well. Of course, to do that it first has to reach its self-pronounced goal of 500,000 cars/year. Knowing Tesla, that can take more time than expected.
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