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Tesla seeks bids for China Gigafactory construction
Reuters | 2018/12/7

SHANGHAI -- Tesla Inc. has begun seeking bids to build its Shanghai Gigafactory and at least one contractor has started buying materials, according to sources and documents reviewed by Reuters, the clearest indication that construction is imminent.

The details reveal that state-owned Shanghai Construction Group Co. is taking part in the bidding while a unit of China Minmetals Corp. is preparing materials for the plant's foundations.

The $2 billion (13.8 billion yuan) factory, Tesla's first in China, is a major bet for the U.S. electric vehicle maker as it looks to bolster its presence in the world's biggest auto market where its earnings have been hit by increased tariffs on U.S. imports.

The so-called Gigafactory would also be China's first wholly foreign-owned car plant, whose progress is widely seen as a reflection of Sino-U.S. relations and the degree to which China is opening its markets.

Tesla, led by billionaire CEO Elon Musk, has begun seeking bids from companies looking to build the plant, according to two people with knowledge of the matter and a construction document on an official local bidding platform.

Shanghai Construction Group is among several companies bidding, the two people said, declining to be identified because the information was not public.

Shanghai Baoye Group Co., a China Minmetals subsidiary, is preparing for the delivery of a large amount of concrete pipe piles and steel pile tips in the second half of December, according to a document on the metals giant's website.

Tesla declined to comment. Shanghai Construction Group did not respond to a request for comment. An official at Baoye parent China Metallurgical Group Corp., a Minmetals company, confirmed involvement.

Tesla faces rising competition in China from domestic EV makers. Its sales tumbled after China raised tariffs on U.S.-built cars, prompting the automaker to cut prices to keep its models affordable.

In moves that would further lower prices, the automaker has said it wants to produce its Model 3 mass-market car from 2019 at the new plant -- Tesla's first Gigafactory outside the United States -- and localize its manufacturing and supply chain.

Shanghai's government, in a statement on its official WeChat late on Wednesday, said Mayor Ying Yong had visited the site of the Gigafactory and that preparation work was nearly complete and construction would start soon.

Ying urged the firm to "accelerate" work on the factory and said production would start to some degree in the second half of next year, the statement showed.

A member of the community at Lingang near the plant's 860,000-square-meter (212.5-acre) site, which Tesla secured in October, said work on ground preparation and fencing appeared nearly complete.

"Workers work very hard on this," the person said. "Sometimes they work until 10 p.m."

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