Tesla Rumored to Buy Land Near Gigafactory Shanghai for Expansion

According to a report on Electrek, Tesla is rumored to be behind the recent purchase of 113 acres of land near Gigafactory Shanghai. It may need the land to expand the Gigafactory in Shanghai’s free trade zone as it pushes to increase its production capacity to meet projected increases in demand in the Asian market.

Tesla completed the first phase of construction of the Gigafactory in 2019 and produced 140,000 Model Y and Model 3 vehicles in Shanghai in 2020. Recent drone footage indicates that the company is still adding buildings to its new factory.

The land that the Gigafactory currently sits on has been leased from Shanghai’s government for a period of 50 years. The deal requires Tesla to invest RMB 14.08 billion within the country and generate RMB 2.23 billion in annual tax revenue by the end of 2023.

The required investment may not be difficult for the company, considering the speed with which it is building the Gigafactory and producing vehicles. The tax revenue may be helped along by the projected increases in demand for electric vehicles in the Asian market. Analysts say that the demand for electric vehicles in China alone could grow as much as 40% to 1.8 million vehicles in 2021.

According to recent SEC filings, Tesla anticipates that it could easily meet its obligations even if expansions at Gigafactory Shanghai don’t quite go as planned — a concern that might have been sparked by environmentalist groups’ recent partially successful challenge to expansions at Gigafactory Berlin, which can crimp its style. Construction at Gigafactory Berlin has also been temporarily slowed down by obstacles that included its water being temporarily shut off due to an unpaid bill. These delays might have been a factor in Tesla’s recent decision to replace the manager in charge of the factory in Germany with a former manager for Mercedes-Benz’s operations in Germany, a move that reportedly annoyed a local automaker’s union.

Creating expansions to its Gigafactory in Shanghai will likely be part of Tesla’s plan to ramp up production in Shanghai to as many as 450,000 vehicles a year. For reference, Tesla delivered 499,550 vehicles worldwide last year, just shy of its goal of 500,000 vehicle deliveries.

Even with falling just short of its delivery goals, 2020 proved to be a record year for the company, both in number of vehicles delivered and in the value of Tesla stock, which briefly punted Elon Musk into the top slot in Bloomberg’s list of world’s wealthiest people.

Unconfirmed anonymous sources say that Tesla could produce its planned $25,000 “Model 2” vehicle in expansions to the Gigafactory on the recently sold land. The vehicle announced at Tesla’s “Battery Day” event last year is likely to be smaller than existing models, although Tesla does plan to include its improved batteries that will be produced by its new, more efficient manufacturing process and give consumers the option to make the vehicle fully autonomous with its Full Self-Driving software. The price tag might make a Tesla vehicle more palatable to consumers who might have considered buying a fully electric vehicle, but feared that they wouldn’t be able to afford it.

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