Shanghai Frontrunner For Chinese Tesla Factory (Rumor)
Originally published on Gas2.
An unnamed source tells Bloomberg that Shanghai now is the leading candidate for a Tesla manufacturing facility in China. The source is anonymous because the negotiations are not yet a matter of public record. He says that Jinqiao Group, a Shanghai government-owned company, has signed a non-binding memorandum of understanding with Tesla that will lead to a $9 billion investment in the area. Tesla will put up half the money in cash, while Jinqiao Group will put up the other half, mostly in the form of real estate. The two will each own 50% of the resulting enterprise.
“This would be a major win for Tesla and Shanghai,” says Steve Man, an auto analyst at Bloomberg Intelligence. “The investment will probably include a nationwide dealership network, superchargers, R&D center and potentially a second Gigafactory.” Building cars in China would allow the American company to avoid the 25% import duty China assesses on cars brought in from other countries. That would make its cars very competitive against other foreign brands like Audi and BMW as well as local manufacturers such as BYD and BAIC.
Shanghai is already a financial and manufacturing center. It is home to SAIC Motor Corp., which has joint ventures with General Motors and Volkswagen. It features excellent rail links to all of China and its port could be key to distributing Tesla automobiles to other Asian nations. It is not the only city hoping to lure Tesla. Suzhou and Hefei are among the other cities that would like to have a Tesla factory, which would be a big boost to the local economy and provide many new opportunities for employment to local residents.
Jinqiao Group “has to date not signed any [memorandum of understanding] or documents with any individuals on a Tesla joint venture factory,” Jinqiao Export Processing said in a statement to the Shanghai Stock Exchange. Calls to Jinqiao Group weren’t answered. The Shanghai Jinqiao Economic and Technological Development Zone, a government body overseeing the area, didn’t respond to a faxed request for comment from Bloomberg.
Khobi Brooklyn, a spokeswoman for Tesla, said the company wouldn’t comment on “rumor and speculation.” A spokeswoman for the Shanghai municipal government would neither confirm nor deny that negotiations are taking place.
Elon Musk has said on numerous occasions that Tesla will have a factory to produce the Model 3 in China eventually. What is not known is whether the company would also manufacture its Model S and Model X in China. In the end, Shanghai may not be the city that Tesla chooses for its Chinese operations, but the Bloomberg story makes it clear that the company has every intention of creating a base of operations in China sooner rather than latter.
Photo by Scott Cooney | CleanTechnica (CC BY-SA 4.0), via CleanTechnica.pics
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Tesla sorely needs this. Without a factory there they’ll never get a big chunk of the Chinese market. And since China is the biggest market for luxury cars Tesla is losing money.
Now we know what Musk has been saving Tesla money for!
No!! I wanted it in Dalian (my wife’s hometown)!! 🙁
Wasn’t going to happen, but still…a man can dream.
Tesla doesn’t have $4.5 billion in cash to put into this right now. And they shouldn’t try to raise it through a public offering at these stock prices.
I’m going to bet we don’t see this money put in until the Model 3 production line is up and running, so that they can do “Exact Copy” on the production line.
Start on the building now and be ready to install equipment when the Fremont Tesla 3 line has proved out?
Right now it’s only a “leading candidate” rumor. Some amount of time to make a final decision. Some time to complete the pre-construction requirements. A year or so to build the building.
Tesla 3 should be coming out in high volumes in two years if everything goes well.
And it sounds like a Chinese company will finance the building. Tesla doesn’t come in until the building is finished.
Would love to be a fly on the wall at the Tesla board discussion of these three choices. We can call them the close 20 km, near 100 km and medium 400 km distance sites from Shanghai airport and port. It is not just a labor verses transport cost. It will surely come down to access to quality workers and suppliers. My bet would be on Jinqiao close to Shanghai airport and port as it is has similar logistics to the Freemont factory – great for trade between the two.