Straight from the horse’s mouth. Despite multiple complications and the ongoing trade war between the US and China placing Tesla plans in doubt, today, the electronic car manufacturer began breaking ground on the construction of the first Tesla gigafactory outside of the US in Shanghai.

On Twitter this morning, the charismatic businessman enthused:

Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today!

Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today! — Elon Musk (@elonmusk) January 7, 2019

Musk stood alongside the Shanghai mayor and other local government officials in a ceremony that marked history. This is the first ever wholly foreign-owned car plant in China (Reuters).

The first bulldozers began construction of the Tesla gigafactory today estimated to cost around $2 billion. Even amid a struggling Chinese economy and ongoing dispute with the US, this event alone marks a significant shift in the world’s biggest car market.

When is the Tesla Gigafactory in Shanghai Completed?

Tesla shareholders have seen the company’s share price rollercoaster over the last year, finally up some 0.4% overall after a tumultuous year.

They will be anxious to know when production of Tesla cars in China will begin. According to Musk, the company is:

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

Aiming to finish initial construction this summer, start Model 3 production end of year & reach high volume production next year — Elon Musk (@elonmusk) January 7, 2019

Tesla Stock Price Up 1.46% Premarket

Tesla’s premarket stock price shows that investors are satisfied with the recent announcements by Elon Musk on Twitter. It’s currently up 1.1.46% premarket:

Trade War Hit Tesla Hard

Tesla’s ambitious plans for China have never been any secret. However, the company’s Chinese sales have been hit hard by the ongoing dispute between Washington and Beijing.

In July, China raised import tariffs on US cars by as much as 40 percent. They soon cut this back down to 15 percent at the start of this year in a “trade war ceasefire.”

Amid these increases, however, Tesla was forced to cut prices for its Model 3 last month for the third time in two months. The company also slashed the Model X and Model S prices by 12 and 26 percent respectively.



Musk and his team have always been positive about a trade war easing, though. Tesla went ahead and secured land for its Shanghai factory in October of last year for $140 million. Initial plans are to produce a volume of some half a million cars a year at the mega-facility.

Another Over-Promise?

Well, Musk is certainly known for his outlandish claims. Selling cars with features that they don’t actually have and then removing them before they come out. He was called out on this by one of his Twitter followers:

Swappable batteries. Solar roofs. Fully autonomous driving by 2016. Ten thousand cars a week by the end of 2018. A new Shanghai factory in 2019.

Swappable batteries. Solar roofs. Fully autonomous driving by 2016. Ten thousand cars a week by the end of 2018. A new Shanghai factory in 2019. pic.twitter.com/0weRRXmN1u — Nixon's Head (@Nixons_Head_) January 7, 2019

However, it seems that this time, Musk’s claims are grounded in fact. The Shanghai government gave Tesla the green light in December to start operations by Q3 2019 and the ceremony in Shanghai today was decorated with the highest government officials.

What Happens Next?

Until the factory opens, Tesla announced on Friday that it will start delivering Model 3 cars to China from March at the starting price of $72,000.



Once production is up and running in Shanghai, Tesla will be able to offer its models at a much more competitive price.

Removing problems of transport and tariffs, as well as access to cheaper labor in a market thirsty for electric cars, is a killer move for Tesla. According to Bloomberg, China requires around seven million electric or hybrid cars by 2025.

Locally produced cars will also allow Tesla to keep its European competitors such as Nio Inc at bay.

Featured image from Twitter.