The electric automaker purchased the site past year for roughly $140,000 and intends on building the 860,000-square-meter site far quicker than is typical of automotive factories, Forbes reports. The 210-acre site is located in the Lingang district of southeastern Shanghai.
Tesla unveiled its first Gigafactory in 2016, which was initially a "tent" production facility in the Nevada desert.
The so-called Gigafactory would also be China's first wholly foreign-owned vehicle plant, a reflection of China's broader shift to open up its auto market even amid the whipsawing trade war.
"China is becoming the global leader in electric vehicle adoption, and it is a market that is critical to Tesla's mission to accelerate the world's transition to sustainable energy", Musk commented. The two sides have called a truce in their trade fight and are engaged in talks to cool tensions, with China temporarily scrapping a retaliatory 25 percent tariff on US -made cars starting January 1.
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Domestic production would help shield Tesla against import duties as the USA and China find ways to wriggle out of the tariff quandary. This has prevented Tesla from accessing the same cash incentives as the country's local auto manufacturers, CNBC reported. This is Gigafactory 3; the first is outside of Reno, NV, and the second is in Buffalo, NY. Tesla has also set up a social media presence on WeChat and Weibo.
The Shanghai plant would supply the "Greater China region" with "affordable versions" of the Tesla Model 3 - the carmaker's first mid-price, mass-market vehicle - and its planned Model Y, Musk tweeted.
Musk added that initial construction on the factory is scheduled to wrap up this summer with Model 3 production beginning by the end of the year and "high volume production" kicked into gear in the following year.
At a ceremony at the site of the plant on the outskirts of Shanghai, Chief Executive Elon Musk joined the city's mayor and other local government officials to formally begin construction of a factory that Tesla has said will cost around $2 billion. People look at a Tesla Motors vehicle on the showroom floor at the Dadeland Mall on February 19, 2014 in Miami, Florida.
At time of publication, Tesla shares traded up 4.1 percent at $331.12.