Tesla Gaining Grounds On Global Operation Plans After Securing Land In Shanghai For Overseas Gigafactory

A man walks near a logo of Tesla outside its China headquarters at China Central Mall in Beijing, China July 11, 2018. (Photo: REUTERS/Jason Lee/File Photo)

Electric vehicle maker Tesla announced that it has signed a memorandum of agreement on Wednesday to secure a 210-acre (860,000 square meters) plot of land in Shanghai, China. In the newly-purchased site will rise the company's first Gigafactory outside of the United States, a clear signal that the EV maker is pushing ahead on its global development plans despite the looming effects and threats brought by the on-going China-US trade war.

The Palo Alto, California-headquartered tech firm had first made public of its plans to build an assembly factory in Shanghai in July of this year, the report from ABC News said.

This decision followed after the Xi Jinping government said that it would exempt full foreign-owned electric vehicle makers from its trade restriction policies as a way to speed up the country's industrial development, particularly in the EV car sector.

Despite the apparent tariff hikes made by both Beijing and Washington upon the multi-billion dollars worth of each other's import goods, Tesla's plan to establish manufacturing satellites pushes through.

The Trump administration has been targeting Chinese technology products and is keen on slapping steep levies on electric cars.

Knowing that China is Tesla's second-largest market for its electric vehicles, it would be timely for the Elon Musk-founded tech firm to push through with the expansion deal.

Tesla won't be the only global automaker to ever set roots on the Asian nation. General Motors Co., Volkswagen AG, and Nissan Motor Corp, just to mention a few, have been putting the billions worth of capital in projects to build manufacturing sites of electric cars in China.

Tesla's partnership with the government of Shanghai will open up a plant touted to have an annual production capacity of 500,000 cars.

As pointed out by Reuters, this new facility would enable the company to double up the size of its global manufacturing which would then help lower the price tags of Tesla cars sold in China.

The news agency confirmed that the Tesla Model 3 maker has already been filling up the staff positions in the upcoming Shanghai factory. The hiring began in August and will continue up to the end of this year.

Tesla said that it would raise the capital to fund the construction by borrowing from several Asian financing institutions. The project is said to cost Tesla around $2 billion.

In Nissan's case, a previous report from Business Times indicated that China's Dongfeng Motor Group will assume the Japanese carmaker's domestic operation being its manufacturing arm in China.

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