Tesla Announces Plans to Produce 3,000 Cars a Week at China Factory

Elon Musk’s Tesla has announced plans to manufacture 3,000 Model 3 vehicles a week in China in order to cut the impact of tariffs on the company — at a factory that hasn’t even broken ground.

Tesla has reportedly begun developing a plan to produce 3,000 Model 3 sedans a week at its Chinese Gigafactory — which has yet to be built.

CNBC reported in October that Tesla purchased an 864,885-square meter plot of land in the Lingang area of Shanghai where the company plans to build its first facility outside of the U.S. Musk’s company purchased the land for approximately 973 million yuan, or $140 million, on Wednesday. Tesla’s Chinese facilities floor space will span 1.7 million square meters according to property transaction records from the Shanghai-based financial data company Wind Info.

Chinese government regulations state that purchases of all industrial-use land are essentially leases that last for 50 years and can potentially be renewed. Tesla’s facility in Lingang will join a host of other auto manufacturers in the area. The company initially planned to produce 250,000 vehicles and battery packs a year at the Chinese factory, now the company plans to produce 3000 Model 3 sedans a week in order to offset the cost of tariffs imposed by the Chinese government on U.S.-manufactured vehicles.

Tesla said in a filing with the Securities and Exchange Commission: “In China, which is the largest market for electric vehicles in the world, our Model S and Model X sales have been, and will likely continue to be, negatively impacted by recently-increased tariffs imposed by the Chinese government on U.S.-manufactured vehicles.”

In a second-quarter letter to shareholders over the summer, Tesla stated that the construction of their Chinese Gigafactory is expected to start over the next few quarters but stated that “our initial investment will not start in any significant way until 2019.”