Tesla Breaks Ground on Shanghai Factory, Aims to Build Model 3s By the End of 2019

Tesla Strikes Deal on New 500,000-Car Plant As New EV Tariffs Take Effect
Tesla broke ground on a new factory in Shanghai (Fremont, California factory pictured). [Photo: Tesla]

The company aims to have its $2 billion gigafactory open by summer 2019.

Tesla is moving forward with its goal to build “Gigafactory 3” in China, as it aims to shore up production of the Model 3 and upcoming Model Y for China. Flanked by Shanghai’s mayor and local government officials, CEO Elon Musk wants to begin production by the end of this year. According to a Reuters report, he said at the event, “We think with the resources here we can build the Shanghai Gigafactory in record time.”

Musk tweeted just prior to the event as well: “Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today!”

In further tweets, Musk further clarified Tesla’s goals for initial construction and Model 3/Y production. The plant is the first plant wholly owned by a foreign entity outside of China. If the company does meet its construction schedule, it will also produce models locally for the Chinese market. That will likely help Tesla minimize the impact of an ongoing trade war between China and the United States, even amid a current ceasefire. As it stands, China agreed to cut its tariffs on imported cars from the U.S. to 15 percent, at least until March.

Tesla stocks rise on the news

Neither Musk nor Tesla mentioned exactly how the $2 billion project would be funded. While making it from groundbreaking to production in under a year is a huge claim, Tesla aims to complete and ramp up capacity to 500,000 cars within the next few years. Electrek reported some comments of Cui Dongshu, secretary general of the China Passenger Car Association:

“Tesla’s China production will have a ‘catfish effect’ in [China’s] auto industry, pushing domestic carmakers to speed up their technological upgrading.”

Cui Dongshu

Interestingly, Musk also mentioned that Shanghai will just produce more affordable versions of the Model 3 and upcoming Model Y. The Model S, Model X and higher-cost versions of the Model 3 will still be produced in the U.S. Tesla stocks rose around 10 percent on today’s news.

Stay tuned to TFLcar.com for more updates!