An aerial view of the Tesla Gigafactory 3 under construction in Lingang, Pudong New Area, Shanghai, China, June 24. Tesla is just months away from its aggressive goal of starting production at Gigafactory 3 in Shanghai in the fourth quater. Photo: AFP

Work is revving up on Tesla’s third “Gigafactory”, its first outside the US. Construction for the US$2 billion, 865,000-square-meter plant in Shanghai started earlier this month after a fanfare ground-breaking ceremony on January 7 attended by CEO Elon Musk, Shanghai’s mayor and other senior Chinese officials.

Tesla and Shanghai are wasting no time, with heavy machinery already at work. The city’s media say the first car, likely a Model 3, will roll off the production line in the fourth quarter of 2019.

One report in the city’s official Jiefang Daily bore the headline: “Watch Tesla’s Shanghai Gigafactory rise before our eyes within a year and you’d better not blink”.

The factory in Shanghai’s Pudong district is being built as Musk hits the accelerator pedal towards a broader market and reduced sticker prices on its sleek sedans powered by lithium ion batteries.

Musk told Chinese Premier Li Keqiang earlier this month in Zhongnanhai in Beijing that the Shanghai facility, the first car plant wholly-owned by a foreign investor, would produce affordable versions of the Model 3 as well as the upcoming Model Y compact SUVs. Tesla owns the Shanghai facility via a Hong Kong-based subsidiary.

Musk commented on Twitter after the ground-breaking ceremony that affordable cars “must be made on [the] same continent as customers”, adding that the Shanghai plant would be “the most advanced Tesla Gigafactory in the world…arguably one of the most advanced factories in the world of any kind.”

Tesla already runs five Tesla sales showrooms across Shanghai.

The US e-car giant’s timetable for the Shanghai Gigafactory is without precedent. It plans to finish initial construction by this summer, less than a year after Tesla inked a deal for the project with Shanghai in October 2018, and for its first high-tech sedans to roll off the production line before the end of the year.

The state-owned China State Construction Engineering Corp is the main contractor for the plant.

An aerial drone clip of Tesla’s Shanghai plant.

As well as an initial target production rate of 250,000 cars per year, the facility will also produce battery cells. Tesla aims to boost production to half a million cars a year by 2020, to help double its targeted production worldwide. Musk also aims for 500,000 vehicles per year from its Fremont plant in California.

Tesla has attracted support from Chinese leaders: local banks vied to give Tesla low-interest loans, the central and Shanghai governments aligned policies to ensure the huge factory’s rapid construction, and Tesla was able to secure the plot without facing rival bidders.

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