Gigafactory Shanghai () (also known as Giga Shanghai, or Gigafactory 3) is an automobile manufacturing plant in Shanghai, China, operated by Tesla, Inc. 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. , 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.
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. 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. 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.
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 in loans from Chinese banks at favorable interest rates, and 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.
In exchange for the land grant and government support, Tesla was required to spend in capital expenditures per mǔ (per ) by the end of 2023, equating to a total minimum investment of (). The factory is also required to generate of annual tax revenues starting at the end of 2023.
On 8 August 2018, compulsory purchase order Shanghai [2018] 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. 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. Tesla won the long-term lease for of land in Lingang, Shanghai on 17 October. Tesla (Shanghai) was the only bidder, with its bid of 973 million Chinese yuan for the 50-year lease covering the site, with the capital coming from local Chinese banks. The Shanghai Land Transfer contract 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. The Land Transfer was scheduled to occur on 12 December 2018, and limits the with a maximum height of . Up to of the area can be used for non-production office buildings. 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. Tesla stated that it planned to eventually be able to produce 500,000 electric vehicles per year at the site.
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. Capital expenditures covering the land purchase and initial design costs for were scheduled to occur in the fourth quarter of 2018. 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.
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.