Tesla Is Closing In on $145 Million Plot for China Factory
Tesla Is Closing In on $145 Million Plot for China Factory
(Bloomberg) -- Tesla Inc. is in the process of procuring land in Shanghai for its first factory outside of the U.S., according to people with direct knowledge of the matter, pushing ahead with plans to set up production in China after months of tumult involving CEO Elon Musk.
The carmaker is the sole bidder for a plot of land with an auction price of about 1 billion yuan ($145 million), the people said, asking not to be identified as the information isn’t public. A decision by the Shanghai government to allocate the land to Tesla could be made as soon as this month, they said.
In July, Tesla reached a preliminary agreement with Shanghai authorities to build a factory that the electric-car pioneer has said will eventually produce 500,000 battery-powered vehicles annually, more than what its lone U.S. assembly plant has made. Setting up manufacturing in China will enable the Palo Alto, California-based company to avoid paying import duties as high as 40 percent and offer cheaper cars in the world’s biggest market for electric vehicles.
The Shanghai government didn’t respond to a request for comment sent outside of normal business hours. Representatives for Tesla also didn’t immediately comment. The company has said the China factory will augment existing production and that its U.S. manufacturing operations won’t be affected.
The progress on its China plans is a bright spot of news for Tesla, which has been pummeled in the stock market the past few months after Musk’s funding-secured tweeting scandal and the resulting fallout with U.S. regulators. The stock fell 2.3 percent to $256.88 Wednesday and is down 17 percent this year.
The carmaker is considering raising some of the $5 billion it intends to invest in the plant near Shanghai from local partners, Bloomberg News reported on Aug. 1, citing a person familiar with the plans. Musk told analysts on an earnings call later that day that he expected it would take about $2 billion worth of investment for the factory to be able to produce around 250,000 vehicles a year.
--With assistance from Dandan Li.
To contact Bloomberg News staff for this story: Haze Fan in Beijing at hfan40@bloomberg.net;Yan Zhang in Beijing at yzhang1044@bloomberg.net
To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Craig Trudell
©2018 Bloomberg L.P.
With assistance from Editorial Board