Breaking Ground! Tesla’s Shanghai Gigafactory 3 to Finish Initial Construction This Summer

“Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today!” tweeted Tesla CEO Elon Musk.

Musk and Shanghai Mayor Ying Yong celebrated the ground breaking of the electric auto manufacturer’s first Gigafactory outside of the US on Jan.7.

He also mentioned that the Shanghai Gigafactory will build “affordable versions” of the Model 3 and Model Y for the greater China region, while more expensive versions and other car models will continue to be manufactured in the US.

“Aiming to finish initial construction this summer, start Model 3 production end of year & reach high volume production next year,” Musk added.

With a total investment of 50 billion yuan ($7.3 billion), the Gigafactory is by far the largest foreign-invested manufacturing plant in Shanghai.

The company acquired the land for the factory in Shanghai’s Lingang Industrial Area on the outskirts of the city for about 900 million yuan ($140 million) in October. The factory is geared up to eventually produce approximately 3,000 Model 3 vehicles per week in the initial phase and about 500,000 vehicles per year when fully operational.

Elon Musk in Shanghai Gigafactory 3 groundbreaking ceremony (photo source: Tesla)

Although Tesla’s addition to the Lingang Industrial Area, a cradle for automobiles, is warmly welcomed by China, the luxury vehicle brand is facing rising competition from local electric automakers such as NIO.

Tesla explained in a news release from the third quarter of last year, that the company continues to lack access to cash incentives available to locally produced electric vehicles in China that are typically around 15 percent of MSRP or more, and is now operating at a 55 to 60 percent cost disadvantage compared to the exact same car locally produced in China.

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The company expects the Shanghai Gigafactory to be a capital efficient and rapid buildout to address the difficulties it’s facing in China compared to its competitors.

Although construction has only just begun, Chinese workers have shown their excitement to join the Gigafactory 3 project by swarming the Tesla job fair in December, to which the company was forced to extend its hiring hours to accommodate the massive turnout.

Featured photo credit to Tesla