Elon Musk the founder of electric car firm Tesla has laid the base or broken ground for starting his first factory at China in Shanghai which will be the firm’s first manufacturing unit outside United States. This new factory will produce Tesla’s Model 3 and also Model Y to push its slow but powerful presence in China which is regarded as world’s largest market for automobiles. Tesla is likely to face tough competition from local electric car makers in China who are ready with their first products and will start making deliveries this year itself.
Mr. Musk has tweeted that this division will make affordable models of Tesla’s Model 3 car which could become its first mass market passenger vehicle and is also building Model Y for Greater China location. He also mentioned that the Gigafactory which will be built will have cost layout out $5 billion and production of Model 3 will start towards end of 2019 and reach high production volume by next year. The carmaker will produce 500,000 vehicles within 5 years in China which will be for local markets and will not impact its operations in USA. Tesla has increased the prices of its product in China by 20 % this week.
Carmakers in general within US have faced pressure from government to keep manufacturing jobs within the country. Though China has a rule that foreign automobile manufacturers have to make joint ventures with domestic firms if they want to start production there but Tesla said that their division will be completely owned by Tesla. Most carmakers in US have been critical of President Trump’s tariffs against China as it is targeting their sector the most and in October last year Tesla warned too that these tariffs were creating challenges. As both nations have imposed tariffs on each other Tesla stated this situation will make its cars expensive by 55 to 60 % more than local firms due to increase in sea transport costs too.