Investor's Corner

Tesla’s Gigafactory 3 in China starts preparations with 6-month construction permit

Simon Alvarez
Posted on

Tesla’s Gigafactory 3 in China is under a very ambitious timeline, considering that electric car maker is expecting to start producing vehicles on the site sometime in the second half of 2019. So far, preparations for the buildout of the upcoming facility are being put in place, including the construction of a perimeter fence that surrounds the company’s 864,885-square meter plot of land in Shanghai’s Lingang Industrial Zone.

Just recently, documents have emerged pointing to Tesla acquiring a construction permit to start building facilities for Gigafactory 3. The construction permit, which was granted by the Shanghai Municipal Government, is good for two stages of construction and effective for 180 days, starting from December 29, 2018. The contractor for the project was listed as China Construction Third Engineering Bureau Co., Ltd, a subsidiary of China Construction, a large government-owned construction firm.

It should be noted that the involvement of a government-owned construction company bodes well for Gigafactory 3’s buildout. With such parties involved, after all, there is little that could get in the way of the project being completed on time. Thus, for now, at least, it would appear that the speed of Gigafactory 3’s construction would likely depend on how fast Tesla can ship and set up its assembly lines for the upcoming facility. If Tesla can accomplish this, there is a very good chance that China’s first locally-made Model 3 would indeed roll out of Gigafactory 3 sometime in the second half of 2019.

So far, Tesla’s Gigafactory 3 buildout has been seeing notable support from the Chinese government. Last year, China all but changed its rules for Tesla when it allowed the company to be the sole owner of Gigafactory 3. After the project was officially announced, things moved at an even faster pace. Local Shanghai banks were quick to grant low-interest loans to fund part of Gigafactory 3’s construction. Tesla’s bid for the 864,885-square meter plot of land in Shanghai’s Lingang Industrial Zone also went unchallenged, allowing the electric car maker to secure the land it needed for the facility without any problems.

While Tesla attracts some negative publicity in China, the company also gets support and favorable coverage from state media. Last month, for one, local Chinese news outlets reported that the facility’s progress is about one year ahead of its original schedule. Shanghai Mayor Ying Yong and Vice Mayor Wu Qing also addressed Gigafactory 3 during a meetup with Tesla’s leaders in China, where they urged the electric car maker and companies involved in the facility’s construction to expedite the factory’s buildout.

When Tesla announced its initial timeline for Gigafactory 3, many were skeptical. The company initially estimated that vehicle production would begin roughly two years after construction begins. This was met by many raised eyebrows from Tesla critics and Wall Street, with Consumer Edge Research analyst James Albertine dubbing the timetable as “not feasible.” Tesla eventually adjusted its timeframe for Gigafactory 3 on its Q3 2018 vehicle production and deliveries report. Instead of being more conservative, though, Tesla opted to do the opposite, stating that it is accelerating the construction of the upcoming Shanghai facility.

Elon Musk, for his part, has teased that he would be visiting China soon for the groundbreaking of Gigafactory 3. Once that is done, the progress of the battery and electric car facility would likely move at an even faster pace.

Tesla’s Gigafactory 3 in China starts preparations with 6-month construction permit
To Top