Tesla's super factory in Shanghai was officially launched in the Lingang Area after Tesla signed a land grant contract with Shanghai municipal administration for planning and land resources. It announced the plan for a China factory in July after the Chinese government said it would end restrictions on full foreign ownership of electric vehicle manufacturers.
Those plans have gone ahead despite tariff hikes by Washington and Beijing on billions of dollars of each other's goods in a dispute over Chinese technology policy.
The real estate transaction marks the first step for Tesla and its Chief Executive Elon Musk to build cars locally in China for the fast-growing market, even as tariffs imposed by Beijing on US -made goods have caused Tesla to hike prices of its imported models.
China is an important market, and has huge potential for something as novel as electric cars.
Tesla is gaining around early Wednesday after the company announced it has secured a site in Shanghai, China, to build its first overseas Gigafactory.
Once the factory is up and running, Tesla will be available to avoid a 40 per cent import tariff on locally-produced cars. Tesla claims it will then take a further "two to three years [after opening] before the factory is fully ramped up".
"Tesla is now operating at a 55 percent to 60 percent cost disadvantage compared to the exact same vehicle locally produced in China", Tesla said in its quarterly report. Much of the cost will be funded with "local debt" the letter said. The local economy will also benefit from the thousands of new jobs the Gigafactory will create and the purchase and delivery of the components Tesla needs to build its electric vehicles.
The first of the new electric models being developed by global firms to hit the market, Nissan's Sylphy Zero Emission, began rolling off a production line in southern China in August.