Gigafactory Shanghai
Built2018–2019
OperatedOctober 2019 (2019-10)
LocationShanghai, China
Coordinates30°52′13″N 121°46′08″E / 30.87016656°N 121.76881044°E / 30.87016656; 121.76881044
IndustryAutomotive
Products
Employees20,000 (June 2023)[1]
Area0.865 km2 (0.334 sq mi; 214 acres)
AddressD203A, Tonghui Road No. 168, Nanhui New Town, Pudong New Area[2]
Owner(s)Tesla, Inc.

Gigafactory Shanghai (Chinese: 特斯拉上海超级工厂; lit. 'Tesla Shanghai Super Factory') (also known as Giga Shanghai, or Gigafactory 3)[3] is an automobile manufacturing plant in Shanghai, China, operated by Tesla, Inc.[4] Construction of the plant began in January 2019, initial production started in October, and the first production vehicles rolled out of the factory in December 2019, less than one year after groundbreaking. The main plant currently manufactures the Model 3 and Model Y. As of July 2023, Tesla says the factory has the capacity to build over 750,000 vehicles per year and is the primary production site for Tesla vehicles exported to regions without a Gigafactory.[5]

Unique among foreign automakers in China, the plant is wholly owned by Tesla and not operated as a joint venture with a Chinese company, the first time the government had allowed such an arrangement. While Tesla owns the factory, it does not own the land it is built on, as is typical in China. Tesla has land use rights with an initial term of 50 years.

History

Background and land purchase (2018)

Tesla Shanghai Co., Ltd., a subsidiary of the electric automaker, was formally established 8 May 2018.[6] In July 2018 Tesla CEO Elon Musk signed an agreement with the Shanghai regional government to build its third Gigafactory, and the first in China.[7] In part due to the good relationship Musk had built with the government, it was permitted to be structured as a wholly owned subsidiary of Tesla and not operated as a joint venture with a Chinese company, the first time the government had allowed such an arrangement for a foreign automaker.[8][9]: 207 

While Tesla owns the factory, it does not own the land it is built on, as is typical in China. The government granted Tesla land use rights with an initial term of 50 years. To finance the plant, Tesla received US$521 million in loans from Chinese banks at favorable interest rates,[10] and US$82 million in grant funding. The local Shanghai government granted Tesla a corporate income tax rate of 15% for 2019 through 2023, compared to the typical 25% rate in China. Having a factory in China also allows the company to avoid tariffs on vehicles imported from the U.S.[11]

In exchange for the land grant and government support, Tesla was required to spend CN¥10.85 billion in capital expenditures per mǔ (per 666.7 m2 or 7,200 sq ft) by the end of 2023, equating to a total minimum investment of CN¥14 billion (US$2 billion).[12][13] The factory is also required to generate CN¥2.23 billion of annual tax revenues starting at the end of 2023.[14]

On 8 August 2018, compulsory purchase order Shanghai [2018] No. 090 was issued by Pudong New Area Planning and Land Administration, with a closing date for objections of 14 August 2018, and finalization scheduled to occur on 20 August 2018.[15] On 26 September 2018, the bidding process for the newly acquired plots Q01-05 in the area designated as 04PD-0303 were advertised, with the restriction that the land be used for electric car manufacturing, with a minimum investment requirement.

The bidding process ran between 17‒26 October 2018, with the proviso that if there was only one bidder meeting the requirements by 11:30 on 17 October 2018, then the process could be closed and finalized early.[12] Tesla won the long-term lease for 86 hectares (210 acres) of land in Lingang, Shanghai on 17 October.[16][17][18]: 5:21  Tesla (Shanghai) was the only bidder, with its bid of 973 million Chinese yuan for the 50-year lease covering the 864,885-square-metre (86.5-hectare) site, with the capital coming from local Chinese banks.[19] The Shanghai Land Transfer contract No. 14 with Tesla (Shanghai) required construction work to begin within 6 months, and be completed within 30 months, with production started after 36 months, and full minimum tax revenues being paid after 60 months.[20] The Land Transfer was scheduled to occur on 12 December 2018, and limits the maximum size of above-ground buildings to 1,729,770 square metres (18,620,000 sq ft) in area [sic] with a maximum height of 30 metres (100 ft).[21] Up to 60,541 square metres (650,000 sq ft) of the area can be used for non-production office buildings.[21] Phase 1 of the project will manufacture Tesla Model 3 and Tesla Model Y cars, with a target production rate of 250,000 electric cars per year.[22] Tesla stated that it planned to eventually be able to produce 500,000 electric vehicles per year at the site.[16][17]

The public environmental impact consultation for Phase 1 of the project was opened on 24 October 2018, and scheduled to run for ten working days.[22] Capital expenditures covering the land purchase and initial design costs for Gigafactory 3 were scheduled to occur in the fourth quarter of 2018.[23] The purchase was aided by a loan from Chinese banks, and converted to a $1.4 billion loan in late 2019, also by Chinese banks.[24]

Construction and delivery (2019)

A construction permit was granted by the Shanghai municipal government authorizing work to begin after 29 December 2018. The project contractor is China Construction Third Engineering Bureau Co., Ltd., part of China State Construction Engineering, a large state-owned construction company.[25]

The factory site is in the Lingang Industrial Zone within the Pudong district of Shanghai, with the western edge bordering the Fengxian district.

By December 2018, construction activity at the site was underway with site grading.[26] Shanghai Mayor Ying Yong visited the site on 5 December.[27][28] A subsidiary of China Minmetals was making preparations for piling foundations.[29] Shanghai Construction Group was one of the companies bidding for part of the larger construction contract.[29]

On 7 January 2019, the groundbreaking ceremony was held.[30] By March, foundation work in some areas of the large facility was in place and structure is being erected, with crews operating at the site on multiple shifts to accelerate construction.[31]

By early August 2019, the building exteriors were nearly complete, and the general assembly building was being fitted with manufacturing equipment, with a target to begin production in November.[32] The plant received its "comprehensive acceptance certificate" on 19 August.[33]

In the 3Q2019 quarterly investor call on 23 October 2019, Tesla reported that it is ahead of schedule with getting the factory into production. Moreover, it was built in just ten months, is ready for production, and was built for approximately 65% less capital expenditure per unit of manufacturing capacity than had been the Model 3 production system in the US. General assembly of the initial Tesla Model 3s was operating by October 2019,[34] with 30% of the car coming from China.[35]

Expansion (2021)

In April 2021, Local reports have noted that preliminary work on the new site south of the main complex has been going on for some time. Tesla was the sole bidder for the land, and while the bidding process Gigafactory produced vehicles and the Model Y at a rate of about 450,000 cars per year, the expanded site is already being prepared for construction.[36]

Expansion of Giga Shanghai was briefly halted in 2023 after the Chinese central government expressed concerns with Elon's activities at SpaceX, in particular the quickly expanding military applications of Starlink and its potential impact on global strategic defense.[37]

Production (2019-today)

Giga Shanghai currently does final assembly of Model 3 vehicles which began in December 2019, with expectation to begin Model Y final assembly later in 2020. While initially, assembly is accomplished with parts and subassemblies that are shipped into the factory from the US, a major push during 2020 will be to gradually increase the "Made in China" (MIC) content in the car as Tesla China manufacturing matures.[38] As of March 2020, MIC Model Y production is slated for January 2021. Production line capacity of Giga Shanghai is aimed at 5,000 cars per week, and if achieved and sustained could result in an annual capacity of more than 250,000 vehicles.[38][17] Once the factory has been fully built out and production has fully ramped, Tesla plans for the factory to reach an annual production capacity of about 500,000 vehicles for Chinese consumers.[16]

Transport truck trailer rigs moved cars out by early December 2019,[39] and the first 15 cars from the new factory were delivered on 30 December 2019, to Tesla employees.[40] The first cars to be produced at the Gigafactory and delivered to Chinese customers were delivered on 7 January 2020.[41][42] Production rate was approximately 1,000 cars per week in early 2020,[43] made by a single shift of workers[44] with a total production line capacity of 2,000 cars per week when Saturday overtime is included.[38]

The Gigafactory Shanghai was temporarily shut down for approximately two weeks by order of the government on 29 January 2020, due to the COVID-19 pandemic.[45] Production resumed 10 February, as did for suppliers and other companies around the country.[46] Several precautions were taken to prevent virus spread,[47] so preliminary plans indicate Tesla could add a second shift of production by the beginning of Q2 2020 which would increase line capacity to approximately 3,500 vehicles per week.[38] By the end of the year, it reached 8,000 vehicles per week,[48] and some of them were found to be right hand drive for export purpose[49] to Australia and New Zealand. In November 2021, total production was 56,965 vehicles and capacity was estimated to be nearing 700,000 vehicles per year, becoming the largest of the Tesla factories.[50] On 28 March 2022, Gigafactory Shanghai was again shut down, this time for 22 days due to a government lockdown in response to the 2022 Shanghai COVID-19 outbreak. It officially reopened on 19 April 2022, initially operating only one shift, with 8,000 workers sleeping at the factory, but resumed normal production near the end of May.[51]

On 12 January 2022, the China Association of Automobile Manufacturers (CAAM) announced that 310,000 new energy vehicles (NEVs) were exported from China in 2021, and that half of the total were assembled in Giga Shanghai.[52] These produced cars are mainly sold to regions such as Europe and Asia and 10 more countries around the world. The main export destination for Chinese-made NEVs was Europe. The China Association of Automobile Manufactures Data showed that the most popular option is Tesla's Model 3.[53]

See also

References

  1. ↑ "Tesla Starts to Lay Off Some Battery Workers at China Factory". Bloomberg News. 6 July 2023. Archived from the original on 8 July 2023. Retrieved 13 August 2023.
  2. ↑ "Grant Contract for State-Owned Construction Land Use Right, dated as of October 17, 2018, by and between Shanghai Planning and Land Resource Administration Bureau, as grantor, and Tesla (Shanghai) Co., Ltd., as grantee (English translation)". www.sec.gov. 29 July 2019. Archived from the original on 13 August 2023. Retrieved 13 August 2023.
  3. ↑ Musk, Elon [@elonmusk] (25 January 2020). "Going with nomenclature of Giga [most widely understood location name] vs Giga #, so Giga Shanghai, Giga Nevada, Giga New York & Giga Berlin" (Tweet). Retrieved 26 January 2020 – via Twitter.
  4. ↑ Alan Ohnsman (10 July 2018). "How Is Musk Going To Pay For Tesla's Chinese Gigafactory?". Forbes.com. Archived from the original on 18 July 2018. Retrieved 17 July 2018.
  5. ↑ "Q2 2023 Investor Update Presentation" (PDF). Tesla, Inc. 19 July 2023. p. 7. Archived (PDF) from the original on 29 July 2023. Retrieved 12 August 2023.
  6. ↑ "特斯拉獨資在浦東注册成立公司" [Tesla establishes wholly-owned subsidiary in Shanghai Pudong]. 上海浦東門戶網站 發. Pudong. 15 May 2018. Archived from the original on 23 October 2018. Retrieved 23 October 2018. 特斯拉（上海） 有限公司注册資本 1 亿元，股東為特斯拉汽車香港有限公司，公司成立日期為
  7. ↑ "Tesla Plots Bold China Factory Move, Stays Silent on Cost". Bloomberg. 10 July 2018. Archived from the original on 19 July 2018. Retrieved 19 July 2018.
  8. ↑ Yuan, Li (30 November 2021). "In China, Tesla Is a Catfish, and Turns Auto Companies Into Sharks". The New York Times. Archived from the original on 13 August 2023. Retrieved 13 August 2023.
  9. ↑ Marquis, Christopher; Qiao, Kunyuan (2022). Mao and Markets: The Communist Roots of Chinese Enterprise. New Haven: Yale University Press. doi:10.2307/j.ctv3006z6k. ISBN 978-0-300-26883-6. JSTOR j.ctv3006z6k. OCLC 1348572572. S2CID 253067190.
  10. ↑ "Tesla Secures $521 Million in Chinese Loans for Shanghai Production Plant". Fortune. Archived from the original on 13 August 2023. Retrieved 13 August 2023.
  11. ↑ "2018 Form 10-K". www.sec.gov. Archived from the original on 15 August 2021. Retrieved 13 August 2023.
  12. 1 2 包雨朦 (12 October 2018). "特斯拉上海工厂选址浮出：临港86万平方米造车用地挂牌出让" [Tesla Shanghai factory site is under tender: 860,000 square meters of car-manufacturing land for sale in Lingang]. 澎湃新闻. Archived from the original on 18 October 2018. Retrieved 18 October 2018.
  13. ↑ Shanghai Planning and Land Resources Administration (26 September 2018). "地块公告号：201813801" [Land parcel: 201813801]. Archived from the original on 18 October 2018. Retrieved 18 October 2018. 临港重装备产业区 04PD-0303单元Q01-05地块 … 四至范围： … 东至规划预留东海二桥控制线绿化带, 南至人民塘绿化带, 西至南奉界河绿化带, 北至老里塘河绿化带 … (平方米)： 864885.0 … 出让年限： 50 … 竞得价(万元)： 97300.0 … 竞得人： 特斯拉（上海）有限公司
  14. ↑ "2022 Form 10-K" (PDF). Tesla, Inc. Archived (PDF) from the original on 21 March 2023. Retrieved 12 August 2023.
  15. ↑ Shanghai Planning and Land Resources Administration (8 August 2018). "沪〔浦〕拟征地告[2018]第090号" [Shanghai [Pudong] proposed land acquisition [2018] No. 090] (in Chinese). 上海市规划和国土资源管理局 [Pudong New Area Planning and Land Administration]. Archived from the original on 23 October 2018. Retrieved 23 October 2018.
  16. 1 2 3 "Tesla inks deal for Gigafactory 3 in China". techcrunch.com. 17 October 2018. Archived from the original on 17 October 2018. Retrieved 17 October 2018.
  17. 1 2 3 "Tesla secures 210-acre land for Gigafactory 3 in China, says 'on track' with accelerated construction plan". Electrek. 17 October 2018. Archived from the original on 18 October 2018. Retrieved 17 October 2018.
  18. ↑ Chris Lister, VP of Gigafactory; Jat Dhillon, Director of Manufacturing (30 November 2018). This is Elon Musk's key to Tesla's future (video). The Verge. Archived from the original on 1 December 2018. Retrieved 2 December 2018 – via YouTube.
  19. ↑ Hancock, Tom; Ju, Sherry (18 October 2018). "Tesla pays $140m for lease on first non-US factory in Shanghai". Financial Times. Archived from the original on 18 October 2018. Retrieved 18 October 2018.
  20. ↑ Shanghai Planning and Land Resources Administration. "沪规土资(2018)出让合同第14号" [Shanghai Regulation Land Transfer (2018) Contract No. 14] (in Chinese). Archived from the original on 23 October 2018. Retrieved 23 October 2018.
  21. 1 2 Shanghai Planning and Land Resources Administration. "沪规土资(2018)出让合同第14号 （1.0版）" [Shanghai Regulation Land Transfer (2018) Contract No. 14, Version 1.0] (contract) (in Chinese).
  22. 1 2 上海达恩贝拉环境科技发展有限公司 (24 October 2018). "特斯拉上海超级工厂项目(一期)环境影响评价公示" [Tesla (Shanghai) Gigafactory Project (Phase 1) Environmental Impact Assessment Publicity] (in Chinese). 上海市环境保护宣传教育中心. Archived from the original on 24 October 2018. Retrieved 24 October 2018.
  23. ↑ "Tesla Third Quarter 2018 Update". Tesla. 24 October 2018. p. 5. Archived from the original on 24 October 2018. Retrieved 24 October 2018. Q4 capex projection includes the purchase of land in China and initial design and other expenditures for Gigafactory 3.
  24. ↑ "Tesla to take new $1.4 billion loan from Chinese banks for Shanghai factory - sources". Reuters. 23 December 2019. Archived from the original on 23 December 2019.
  25. ↑ Alvarez, Simon (3 January 2019). "Tesla's Gigafactory 3 in China starts preparations with 6-month construction permit". Teslarati. Archived from the original on 7 January 2019. Retrieved 6 January 2019.
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  27. ↑ City of Shanghai (5 December 2018). "中芯、特斯拉、积塔……应勇今天调研了这些重大投资项目！" [SMIC, Tesla and Jita … Ying Yong visited these major investment projects today!] (Press release) (in Chinese). Archived from the original on 13 May 2019. Retrieved 5 December 2018.
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  29. 1 2 "Hit by trade war, Tesla opens bid process to build China Gigafactory". South China Morning Post. 6 December 2018. Archived from the original on 6 December 2018. Retrieved 17 December 2018. Shanghai Construction Group is among several firms bidding … Shanghai Baoye Group, a China Minmetals subsidiary, is preparing for the delivery of a large amount of concrete pipe piles and steel pile tips in the second half of December [2018]
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  37. ↑ "Tesla China Plant Expansion in Doubt Over Starlink Concerns". Bloomberg. US. 12 January 2023. Archived from the original on 29 January 2023. Retrieved 21 January 2023.
  38. 1 2 3 4 Suba, Randall (9 March 2020). "Tesla Giga Shanghai Update: Projected 2021 production, Model Y delivery schedule, Model 3 Long Range". Archived from the original on 18 November 2020. Retrieved 10 March 2020.
  39. ↑ Tesla Made-in-China Model 3 first deliveries imminent as carriers spotted leaving Gigafactory 3 Archived 9 December 2019 at the Wayback Machine, Teslarati, 8 December 2019, accessed 9 December 2019.
  40. ↑ China, Tesla (29 December 2019). "Tesla will deliver the first China-made Model 3 at Gigafactory 3 plant in Shanghai TODAY. The 15 customers who are slated to get their Model 3s first are Tesla employees.pic.twitter.com/bOTeR8wjUL". @teslacn. Archived from the original on 3 January 2020. Retrieved 30 December 2019.
  41. ↑ Tesla, Inc. [@Tesla] (7 January 2020). "We just delivered our first customer cars from Gigafactory Shanghai, marking only one year from when the teams broke ground on the site" (Tweet). Archived from the original on 11 January 2020. Retrieved 7 January 2020 – via Twitter.
  42. ↑ "Tesla delivers first Chinese-made Model 3 to customers | The Star". The Toronto Star. 7 January 2020. Archived from the original on 8 January 2020. Retrieved 23 January 2020.
  43. ↑ Lambert, Fred (12 February 2020). "Tesla is going to make discontinued Model 3 Long Range RWD in China, already produced over 2,000 cars this year". Electrek. Archived from the original on 13 February 2020. Retrieved 13 February 2020.
  44. ↑ "Projected 2021 production, Model Y delivery schedule, Model 3 Long Range". TESLARATI. 9 March 2020. Archived from the original on 18 November 2020. Retrieved 9 March 2020.
  45. ↑ "Tesla says China has ordered its Shanghai factory shut down over coronavirus fears", The Verge, 29 January 2020, https://www.theverge.com/2020/1/29/21114377/tesla-coronavirus-delay-production-factory-china Archived 2 February 2020 at the Wayback Machine
  46. ↑ "China Focus: Back to work, enterprises gradually resume operation amid epidemic outbreak - Xinhua | English.news.cn". www.xinhuanet.com. Xinhua News Agency. 10 February 2020. Archived from the original on 13 February 2020. Retrieved 13 February 2020.
  47. ↑ Alvarez, Simon (17 March 2020). "Tesla China shares Giga Shanghai safety measures against COVID-19 virus". TESLARATI. Archived from the original on 19 March 2020. Retrieved 17 March 2020.
  48. ↑ Merano, Maria (5 January 2021). "Tesla Gigafactory Shanghai reaches 8k/week production capacity: study". Archived from the original on 5 January 2021. Retrieved 5 January 2021.
  49. ↑ Alvarez, Simon (14 January 2021). "Tesla Model 3 Right Hand Drive fleet spotted in Giga Shanghai ready for export". Archived from the original on 26 January 2021. Retrieved 28 January 2021.
  50. ↑ John, Darryn (21 December 2021). "Giga Shanghai's November 2021 production figures indicate annualized rate of 683,000 cars". Archived from the original on 23 December 2021. Retrieved 23 December 2021.
  51. ↑ Lambert, Fred (8 June 2022). "Tesla Gigafactory Shanghai is going out of 'closed loop' with workers sleeping at the plant this week". Electrek. Archived from the original on 13 June 2022. Retrieved 14 June 2022.
  52. ↑ "China's new energy vehicles exports tripled in 2021, with half made by Tesla". KrASIA. 13 January 2022. Archived from the original on 14 January 2022. Retrieved 13 January 2022.
  53. ↑ Cooke, Philip (January 2020). "Gigafactory Logistics in Space and Time: Tesla's Fourth Gigafactory and Its Rivals". Sustainability. 12 (5): 2044. doi:10.3390/su12052044. hdl:11250/2736292. ISSN 2071-1050.
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