Elon Musk Announces China Tesla Plant After Paying Lip Service to Trump’s Trade Campaign 11 Jul 2018
Tesla announced Tuesday the embattled electric car company plans to build a factory in Shanghai, dramatically increasing its notoriously constrained production capacity.
CEO Elon Musk said the plant, whose plans have reportedly been in the works for a year, would eventually have an annual production capacity of 500,000 cars, adding that he hoped it would be “completed very soon.”
A joint announcement released by Shanghai’s government said a preliminary agreement had been signed to build the plant in the commercial hub’s Lingang district.“Shanghai will be the location for the first Gigafactory outside the United States,” said Musk. “It will be a state-of-the-art vehicle factory and a role model for sustainability. We hope it will be completed very soon.”
The announcement has raised questions about how the new facility will be paid for. Tesla benefits from millions in U.S. government subsidies and has been burning through billions of dollars as it has struggled to raise the rate of production of its more “affordable” Model 3 car. At the end of the first quarter, the company had just $2.7 billion of cash on its balance sheet.
According to reports, Tesla’s new factory would be the first in China’s to be wholly owned by a non-Chinese carmaker. The U.S. has criticized China for requiring foreign manufacturers to partner with domestic Chinese companies, a practice the U.S. says facilitates theft of U.S. intellectual property and technology.
But that may not be enough to prevent China from stealing Tesla technology.
“On Tuesday, Tesla also signed an electric vehicle investment agreement with Shanghai’s Lingang Management Committee, the Lingang Area Development Administration and the Lingang Group. A development and innovation center will also be set up. In theory, this is where a technology transfer could happen, even without a joint venture company,” Bloomberg columnist Anjani Trevedi pointed out. “That would defeat the purpose of having a wholly owned enterprise.”