Musk Urges Chinese Consumers to Buy Model 3 Now to Fund Factory

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Tesla (TSLA) has broken ground on a Shanghai, China, factory - the first plant outside the US for the electric auto manufacturer.

The company plans to build a new factory in China to produce Tesla Model 3 electric vehicles.

Despite its relative affordability compared with other Tesla models, the price of a US-made Model 3 starts at about US$50,000, but Musk has said that he aims to get the price down to US$35,000.

As a final point, Elon Musk previous year indicated that Model Y production may begin as early as November 2019.

After four years of planning, Tesla Inc. finally broke ground on its planned $5 billion factory in the world's biggest auto market. For context, that number is about double Tesla's current yearly production.

It came as United States and Chinese officials began talks aimed at overcoming the bruising dispute between the world's two biggest economies that has rattled markets and fuelled fears of a global slowdown.

Tesla has registered over 14,000 Model 3 VINs during the first eight days of January 2019. The company wants to take advantage of demand for electric vehicles in the world's biggest auto market.

Tesla has opened a tender process to build a $2 billion plant in Shanghai - dubbed a Gigafactory - and at least one contractor has started buying materials, Reuters reported earlier last month. "Affordable cars must be made on same continent as customers".

Domestic production would help shield Tesla against import duties as the US and China find ways to wriggle out of the tariff quandary.

Higher-priced models will be built in the USA for export to China, he said. Apple triggered global equity losses last week when it said slackening Chinese demand spurred it to cut its revenue outlook for the first time in nearly two decades.

The ability to produce vehicles in China could give Tesla an edge as it would reduce tariffs to the country as well as ocean transport charges.

Tesla has said it plans to use mostly local debt to fund the factory. However, once the factory achieves "full production" that target will be raised to 500,000. "Over the last six years, we have opened 60 Tesla locations, almost 1,500 Superchargers, and more than 1,850 destination chargers in the country", Musk said in the news release.

Tesla purchased the land for the Shanghai factory just outside the city for approximately $140 million in October.

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