Tesla’s Shanghai Gigafactory is of strategic importance to the electric carmaker given that Chinese authorities are aiming to have only EVs plying around in the country by 2030.
On Monday, Tesla Inc’s CEO, Elon Musk stated, the electric carmaker will break ground for its Shanghai Gigafactory where it will commence the production of its mass market Model 3 sedan by the end of 2019.
The info was tweeted by Musk ahead of the formal start of construction at its first Chinese plant.
Tesla’s $2 billion Shanghai factory is one of the biggest bets the U.S. electric vehicle maker has taken as it pushes to bolster its presence in China – the world’s biggest auto market. Its Shanghai Gigafactory is also aimed at mitigating risks stemming from the U.S.-China trade war.
Tesla’s sales in China have taken a hit due to the imposition of import tariffs on U.S. imports by China.
“Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today!” tweeted Musk.
Tesla’s Shanghai Gigafactory will be its first wholly foreign-owned car plant and marks a strategic broader shift in the Chinese market, with policymakers slowly opening up the domestic car market due to trade pressures piled by the United States.
In the initial phase of production, Tesla plans on making the Model 3 and Model Y vehicles with an annual capacity of 250,000 vehicles.
“Aiming to finish initial construction this summer, start Model 3 production end of year & reach high volume production next year,” tweeted Musk in a separate post while adding, “Shanghai Giga production of Model 3/Y will serve greater China region”
According to a statement by the Shanghai government, mayor Ying Yong has urged Tesla to “accelerate” work on the factory saying production will start in the second half of 2019.
Electric vehicle sales forecasts by analysts have placed China in the forefront of this emerging segment. Beijing has already put regulations in place that drives this segment forward with the aim of having 100% EVs on the road by 2030.