Tesla sets up Shanghai beach head with wholly-owned plant in world’s largest electric car market

Tesla will set up its first overseas assembly in China’s premier commercial city, establishing a beach head in the world’s largest vehicle market even as a trade war simmers between Washington and Beijing.

The Palo Alto, California-based carmaker will establish its Gigafactory 3 at Lingang near Shanghai’s free-trade zone, with an annual capacity to produce 500,000 electric vehicles, according to an announcement. The wholly foreign-owned plant – the first car plant in China to operate without a local partner – will also be the largest overseas manufacturing investment in the Chinese city, possibly surpassing Walt Disney’s US$5.5 billion spending in Shanghai Disney Resort.

Shanghai city officials did not disclose the amount of investment, and Tesla officials were not available for comment. Tesla’s Chief Executive Elon Musk, on a three-day visit to Shanghai and Beijing, met Shanghai’s mayor Ying Yong, a governmental source familiar with the matter said.

“It is in line with expectations that Tesla will establish its mainland factory in Shanghai, after it set up a research and development subsidiary in Lingang in May,” said Qian Kang, an entrepreneur dealing in car parts. “Chinese Telsa buyers will benefit as local production will eventually result in lower prices for the cars.”