Tesla Breaks Ground on Factory in China

January 07, 2019 at 10:46 AM

Tesla Inc. has broken ground at the site of its planned vehicle assembly plant in Shanghai, the company’s first factory outside the U.S.

The carmaker aims to finish initial construction of the $2 billion facility this summer and launch production of entry-level versions of its Model 3 electric sedan there by year-end, which is several months sooner than previously planned. The plant also will produce Tesla’s upcoming Model Y electric crossover.

Combined annual capacity of the two models ibe 250,000 units initially. Output eventually is expected to be doubled to 500,000 units.

Tesla is accelerating construction of the facility, which was announced last July, amid ongoing trade tensions between China and the U.S. Last year Tesla’s sales in China plunged from more than 3,500 units in June to just over 200 in October due to the 40% tariffs China imposed on imported cars.

Higher-priced versions of the Model 3 and Model Y will be sourced from the U.S. Tesla also will continue to ship its top-end Model S sedan and Model X crossover vehicle to China from the U.S.