SHANGHAI – Tesla Inc. is accelerating the construction of its Gigafactory 3 in China, which will begin producing vehicles during the second half of 2019, much earlier than planned, China Daily reported on Friday.
Both Tesla and the government of Shanghai, where the factory is located, confirmed that the construction of the facility is advancing faster than expected.
Under the initial plan, it would have taken about two years for the Shanghai plant to start manufacturing and another two or three years before it reached its maximum 500,000 vehicles per year capacity.
Last October, Tesla confirmed it had secured the land for its first factory outside the United States through a 50-year lease.
The Shanghai government reported on social media that the leveling of the land has been completed and construction would start soon.
This factory will allow Tesla to accelerate its expansion plans in the largest EV (electric vehicle) market in the world. Close to 777,000 EVs were purchased this year in China, and sales could surpass 1 million units this year, according to the China Association of Automobile Manufacturers.
The factory will be located in Lingang, where there are already more than 20 manufacturers of automobiles and auto parts. The government has designated the area for the development and manufacturing of new energy smart vehicles.
Tesla’s Chinese factory would reduce shipping costs and tariffs since the company currently imports all the cars it sells in the country from the US.
It would also allow it to better compete with domestic firms such as BYD Auto and BAIC Group, which in recent years have positioned themselves as leaders of the sector in China, where the government is promoting the purchase of EVs to fight pollution.
Early this year, the government announced foreign manufacturers would no longer need joint subsidiaries to operate in the country. In May, Tesla announced the opening of a Shanghai subsidiary dedicated to the research and development of electric cars.