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Tesla is closing in on Gigafactory 3 deal in China with 500,000 cars per year capacity, report says

Tesla CEO Elon Musk is reportedly in China right now to close the long-anticipated deal to build a wholly-owned local factory without a joint-venture with a Chinese company.

Reports coming out of the country claim that the automaker is now finally closing in on the deal for what will likely be called ‘Gigafactory 3’.

The South China Morning Post reported today that Tesla signed an agreement with the Shanghai government to set up the factory in Lingang New City.

We contacted Tesla for a comment on the report, but the company wasn’t immediately available for a comment. We will update if we get a response.

Earlier this year, we reported that the automaker has set up a new company in Shanghai’s Free-Trade Zone – presumably in preparation for this deal.

The report also states that the deal is for a factory with a capacity for 500,000 electric cars per year.

Musk also recently stated that all future Gigafactories will produce both battery cells and complete electric vehicles for a fully integrated manufacturing facility.

At Gigafactory 1 in Nevada, Panasonic currently manufactures battery cells for the Model 3 while Tesla manufactures the battery packs and drive units, as well as Powerwalls and Powerpacks.

The Gigafactory 2 in New York is where Panasonic produces solar cells and panels for Tesla, who also uses the plant to make its solar roof tiles.

As you can see, there’s a trend of Tesla partnering with Panasonic to help with manufacturing at gigafactories.

The CEO of the electronics giant recently said that they are open to working with Tesla on a gigafactory in China.

The factory can’t come soon enough for Tesla, which recently had to increase the price of Model S and Model X by over $20,000 in China due to new trade-war tariffs.

Local manufacturing will enable Tesla to avoid the import duties and it looks like Tesla might be the first foreign automaker able to get a Chinese factory without a 50-50 joint-venture with a Chinese partner.

China’s recent electric vehicle mandate forced many foreign automakers to make deals with local companies to produce electric vehicles in order to protect their existing gas-powered vehicle business.

On the other hand, Tesla was able to wait and the government eventually changed the protectionist law by making an exception for electric vehicles.

There are still many unknown details, including how Tesla will finance the project and the timeline for bringing the factory online.

We will update you with a new report as soon as we know more.

UpdateTesla makes Gigafactory 3 in China official, plans to start production in 2 years

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