Tesla shares are lower Wednesday, after the US-based electric car maker signed an agreement to secure land in Shanghai to build its first overseas Gigfactory. This marks a major step on the road to Tesla manufacturing its electric cars locally, for the Chinese market.
By 1630 BST, Tesla shares were 1.83% lower at $271.52. The stock has been inching higher in recent days, after a period of sharp declines.
Tesla to build Chinese Gigafactory
Tesla and the Shangahi government Wednesday signed an agreement securing an 860,000 square metre site, on which the electric car maker will build its first overseas Gigafactory.
“Tesla's mission is to 'accelerate the world's transition to sustainable energy', not only to provide all types of electric vehicles, but also to provide scalable clean energy generation and storage products,” Robin Ren, Tesla’s Vice President of Tesla worldwide sales said.
“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,” Ren added.
Based on previous agreements made between China and Tesla, the new factory will have the capacity to manufacture some 500,000 electric vehicles per year to serve the local market.
It will also ensure the Chinese market becomes a major one for Tesla, regardless of import tariffs that are imposed and will remain amid the US-China trade dispute.
Tesla reportedly began hiring for the new factory, in August this year. The estimated $2 billion capital required capital for the construction of the project, is set to be raised on the Asian debt market.
Musk to buy $20 million of Tesla stock
Separately, in a new SEC Tesla filing, CEO Elon Musk notified the car manufacturer, that he intends to purchase $20 million worth of Tesla stock.
“Elon has notified Tesla that he intends to purchase from Tesla, and Tesla expects that it will issue and sell to Elon, $20 million of Tesla’s common stock during the next open trading window at the then-current market price,” the October 16 SEC filing states.