Elon Musk breaks ground on Tesla’s Shanghai 'gigafactory'

Elon Musk, the chief executive of electric carmaker Tesla, broke ground on the company’s new “gigafactory” in Shanghai on Monday.

The company plans to build a new factory in China to produce Tesla Model 3 electric vehicles.

Musk said on Twitter on Monday that Tesla is aiming to complete construction of the factory this summer, with production of the vehicles scheduled to begin by the end of 2019. He said that high-volume production of the Model 3 cars is expected to begin in the factory in 2020.

Operating at full capacity, Tesla’s new facility in China is expected to produce as many as 500,000 vehicles per year.

That’s significantly higher than the output of most vehicle manufacturing sites, which typically produce between 200,000 and 300,000 cars per year.

The Shanghai gigafactory will produce cheaper versions of the Model 3 car for the Chinese market, where Tesla faces a contracting car market and many Chinese competitors are also building electric vehicles.

Last year, Tesla increased the prices of its vehicles in China because of a 25pc tariff on imported US-made vehicles. The Chinese government has since dropped that tariff, however, which prompted Tesla to reduce the cost of its cars in the country.

The creation of a domestic manufacturing facility in China will allow Tesla to avoid possible future sanctions by the Chinese government on US-manufactured vehicles.

“Affordable cars must be made on same continent as customers,” Mr Musk wrote on Twitter on Monday.

Tesla opened its first gigafactory in Nevada in 2016. The company has another site in New York, and has said it hopes to open another large factory in Europe.

Employees at the Tesla factory in Nevada have described poor working conditions and cramped facilities for staff. Tesla has played down those claims, however, touting the factory’s safety record.