Musk lays foundation of USD 7 billion Tesla plant in China

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Construction on the US electric vehicle maker's first Chinese factory has officially begun, reports Reuters. "All Model S/X & higher cost versions of Model 3/Y will still be built in U.S. for WW market, incl China", he later added, referring to the worldwide market including China.

According to a series of tweets by Musk, the Company is aiming to complete the initial construction work this summer and start producing its cheapest auto, the Model 3, by the end of the year.

China typically requires foreign automakers to set up joint ventures with domestic firms when establishing manufacturing plants, which entails the sharing of profits and technology with local partners.

Tesla has tapped into China's growing mainstream electric vehicle market and established its charging network covering most cities in the country's developed regions, such as the Yangtze River Delta in east China and the Pearl River Delta in the south.

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According to a report in teslarati.com, by producing its lower-end Model 3 and Model Y in Shanghai, Tesla would be able to price the vehicles very competitively in the country - regardless of the presence of a trade war between the U.S. and China.

Tesla is eager to get the factory up and running as soon as possible so it can begin constructing select models locally.

CEO Elon Musk said Monday on Twitter that the company will start production in China of its Model 3 and a planned crossover by the end of the year. "And the competition is getting more and more fierce". It also comes on the back of Tesla's ability to ramp up production of Model 3 sedans, marking the beginning of a turn in market sentiment.

The electric automaker purchased the site a year ago for roughly $140,000 and intends on building the 860,000-square-meter site far quicker than is typical of automotive factories, Forbes reports. "This week, we've started taking online orders for Model 3 in China, so that customers can configure their vehicle to take delivery in the weeks ahead".

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A general view shows a construction site of a Tesla factory during a ground-breaking ceremony for the factory in Shanghai on Jan 7, 2019.

"With the resources here, I think we can build the Shanghai Gigafactory in a record time", Musk said during the rain-soaked ceremony.

Apple sparked global alarm over the prospects for the world's second-largest economy last week when it cut its revenue forecast citing slowing demand in China and the trade war.

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