Tesla buys land in Shanghai for first overseas gigafactory

Tesla's US$2 billion investment will double the size of its manufacturing and enable the electric vehicle maker to trim prices of its cars in China, the world's largest auto market. The plant in Shanghai will have an annual capacity of 500,000 cars.

SHANGHAI, CHINA (REUTERS) - Tesla has signed an agreement with the Shanghai government for a plot of land to build its first overseas US$2 billion (S$2.75 billion) gigafactory. 

The US$2 billion investment will double the size of Tesla's manufacturing and enable the electric vehicle maker to trim prices of its cars in China, the world's largest auto market.

In July, Tesla said it was opening a plant in Shanghai with an annual capacity of 500,000 cars.

"Well, I definitely think it gives us a glimpse into Tesla's long-term strategy. They do want to penetrate that Chinese market that sells a ton of units and definitely far and away the largest EV market, a Tesla speciality. So, definitely, a growth strategy that Tesla is rolling out," said Mr Jeremy Acevedo, manager of data strategy at car information site Edmunds.

"And we do have some concrete plans that they're providing, as far as producing the vehicle there, and, really, selling in that market, avoiding some of the tariffs, and also hauling in some of the rebates that they offer for locally produced EVs," he said.

Tesla's stock fell after Business Insider reported that a vice-president of manufacturing exited the company.

It has lost a number of high-profile executives in the last few months, as it wrestles with production of its mass market Model 3 sedan.

It has also struggled after chief executive Elon Musk took to Twitter, saying that he was considering taking Tesla private.

That led to a lawsuit and, subsequently, a settlement with the Securities and Exchange Commission.