Tesla Inc has signed a deal with the Shanghai government for an 860,000 square meter plot of land to construct its first overseas Gigafactory, the automaker stated in a Chinese social media post.
The land agreement marks a major step toward the company and its CEO Elon Musk making cars regionally in China for the fast-growing market, even as tariffs added by Beijing on U.S.-made goods have resulted in hiking of prices of its imported models.
Tesla signed a long-awaited deal with Shanghai officials in July to construct its first factory outside the United States, that would double the amount of its global manufacturing and assist reducing the pricetag of Tesla cars sold in the largest auto market of the world.
“Securing this site in Shanghai, Tesla’s first Gigafactory outside of the United States, is an important milestone for what will be our next advanced, sustainably developed manufacturing site,” stated Robin Ren, Tesla’s vice president of worldwide sales.
Tesla have not revealed how much they paid for plot, but the Shanghai Bureau of Planning and Land Resources stated on Wednesday that a plot of land of 864,885 square meters had been sold at auction at a cost of 973 million yuan ($140.41 million).
Tesla signed a deal with Shanghai officials in July to start a plant in the Chinese city with a yearly capacity of 500,000 cars.
The factory is going to helpful for Tesla in China’s rapidly growing market for so-called new-energy vehicles (NEVs), a category made up of electric battery cars and plug-in electric hybrid vehicles.