Tesla confirmed the purchase of a 534-square-mile plot of land in Shanghai, China for the future site of its upcoming Chinese Gigafactory. The announcement was made official Wednesday morning, following the signing of an agreement with the Chinese government in July of this year.
Despite having kicked-off the employee hiring process back in August, Tesla has remained tight-lipped about its latest endeavor, especially the price it paid for the ginormous piece of real estate. However, the Shanghai Bureau of Planning and Land Resources told Reuters that a plot in Shanghai with nearly identical dimensions recently sold for the equivalent of $140.51 million at auction. That’s a small drop in the bucket for Elon Musk’s new factory project, which is set to cost around $2 billion total.
“Securing this site in Shanghai, Tesla’s first Gigafactory outside of the United States, is an important milestone for what will be our next advanced, sustainably developed manufacturing site,” said Robin Ren, Tesla’s vice president of worldwide sales.
China’s growing car market has a voracious appetite for Teslas, and the American automaker fully plans to take advantage of that. However, with President Trump and the Chinese government trading punches in the current trade war, tariffs on U.S.-made goods have raised the price of Tesla models substantially in the Asian country. The solution to this problem will be locally-produced Teslas, which will circumvent tariffs, lower overall costs, and capture a much larger portion of the Chinese electric-car market.
While China’s car market is cooling overall, the demand for alternative-energy vehicles is steadily growing. In the first nine months of 2018, 721,000 new-energy vehicles (NEVs) have been sold in the country, cites Reuters. Tesla says its new factory will have an annual capacity of 500,000 cars, effectively doubling its international business.