BEIJING: Electric auto brand Tesla Inc. said it signed an agreement Wednesday to secure land in Shanghai for its first factory outside the United States, pushing ahead with development despite mounting US-Chinese trade tensions.
Tesla, based on Palo Alto, California, announced plans for the Shanghai factory in July after the Chinese government said it would end restrictions on full foreign ownership of electric vehicle makers to speed up industry development.
Those plans have gone ahead despite tariff hikes by Washington and Beijing on billions of dollars of each other’s goods in a dispute over Chinese technology policy. US imports targeted by Beijing’s penalties include electric cars.
China is the biggest global electric vehicle market and Tesla’s second-largest after the United States.
Tesla joins global automakers including General Motors, Volkswagen and Nissan Motors that are pouring billions of dollars into manufacturing electric vehicles in China.
Local production would eliminate risks from tariffs and other import controls. It would help Tesla develop parts suppliers to support after service and make its vehicles more appealing to mainstream Chinese buyers.
Tesla said it signed a “land transfer agreement” on a 210-acre (84-hectare) site in the Lingang district in southeastern Shanghai.
That is “an important milestone for what will be our next advanced, sustainably developed manufacturing site,” Tesla’s vice president of worldwide sales, Robin Ren, said in a statement.
Shanghai is a center of China’s auto industry and home to state-owned Shanghai Automotive Industries, the main local manufacturer for GM and VW.
Tesla said earlier that production in Shanghai would begin two to three years after construction of the factory begins and eventually increase to 500,000 vehicles annually.
Tesla has yet to give a price tag but the Shanghai government said it would be the biggest foreign investment there to date. The company said in its second-quarter investor letter that construction is expected to begin within the next few quarters, with significant investment coming next year. Much of the cost will be funded with “local debt” the letter said.
Tesla’s $5 billion Nevada battery factory was financed with help from a $1.6 billion investment by battery maker Panasonic Corp.
Analysts expect Tesla to report a loss of about $200 million for the three months ending Sept. 30 following the previous quarter’s $742.7 million loss. Its CEO Elon Musk said in a Sept. 30 letter to US securities regulators that the company is “very close to achieving profitability.”
Tesla’s estimated sales in China of under 15,000 vehicles in 2017 gave it a market share of less than 3 percent.
The company faces competition from Chinese brands including BYD Auto and BAIC Group that already sell tens of thousands of hybrid and pure-electric sedans and SUVs annually.
Until now, foreign automakers that wanted to manufacture in China were required to work through state-owned partners. Foreign brands balked at bringing electric vehicle technology into China to avoid having to share it with potential future competitors.
The first of the new electric models being developed by global automakers to hit the market, Nissan’s Sylphy Zero Emission, began rolling off a production line in southern China in August.
Lower-priced electric models from GM, Volkswagen and other global brands are due to hit the market starting this year, well before Tesla is up and running in Shanghai.
Tesla secures land in Shanghai for first factory outside US
Tesla secures land in Shanghai for first factory outside US
Closing Bell: Saudi main index closes in red at 10,709
RIYADH: Saudi Arabia’s Tadawul All Share Index dipped on Thursday, losing 138.89 points, or 1.28 percent, to close at 10,709.04.
The total trading turnover of the benchmark index was SR6.59 billion ($1.75 billion), as 102 of the listed stocks advanced, while 154 retreated.
The MSCI Tadawul Index decreased, down 22.40 points or 1.52 percent, to close at 1,450.58.
The Kingdom’s parallel market Nomu lost 123.85 points, or 0.54 percent, to close at 22,792.98. This came as 30 of the listed stocks advanced, while 40 retreated.
The best-performing stock was Al-Rajhi Co. for Cooperative Insurance with its share price surging by 9.96 percent to SR74.50.
Other top performers included Jazan Development and Investment Co., which saw its share price rise by 9.89 percent to SR8.33, and Gulf Insurance Group, which saw a 7.48 percent increase to SR23.
On the downside, City Cement Co. and Al Gassim Investment Holding Co. saw declines, with their shares dropping by 5.51 percent and 4.22 percent to SR11.50 and SR13.15, respectively.
On the announcement front, Almoosa Health Co. has signed a construction contract with Almajal Alarabi Group valued at SR608.85 million to complete the electrical, mechanical, and architectural finishing works for the new Almoosa Specialized Hospital in AlHofuf City.
The agreement, finalized on Feb. 26, covers all complementary internal and external works based on approved engineering designs to ensure the facility is fully operationally ready upon completion.
According to a Tadawul statement, work on the project will commence immediately, with an expected completion timeline of 16 months.
Almoosa Health intends to finance the development through a combination of its own resources and long-term Shariah-compliant facilities secured from local banks, with the financial impact anticipated to begin following the hospital’s completion and commissioning.
Almoosa’s share price surged by 4.24 percent to reach SR147.50.
