As a trade war opens between China and the US, electric vehicle company Tesla today signed an agreement with the municipal government of Shanghai to build a "Gigafactory" there, with the capacity to produce 500,000 vehicles a year.
The first Tesla plant outside the US would be in Nanhui New City, a settlement built 60km southeast of downtown Shanghai, South China Morning Post reports.
Elon Musk, Tesla’s co-founder and chief executive, is reported to be visiting China.
Thanks to new Chinese tariffs on US cars, the cost in China of a Tesla Model S and Model X has risen by as much as $30,000, effectively pricing it out of its second largest market.
The plan to build a Shanghai Gigafactory, which was first mooted in June last year, follows an announcement by the Chinese government last month that it would phase out rules requiring foreign auto makers to share factory ownership and profits with Chinese companies by 2022.
If it goes ahead, the plan to build Gigafactory 3 would be good news for Nanhui New City, which is also known as Lingang New City. This was envisaged as a high-tech rival to Hong Kong, but became a ghost city after Chinese investors bought land without relocating.
The government responded by setting up eight university campuses, attracting 100,000 students.
Image: Nanhui New City (Gerkan, Marg & Partners)