On March 1, it was revealed that Shanghai is selling a plot of land over 460,000 square meters located near Tesla's Giga Shanghai for the construction of a new energy vehicle manufacturing facility. According to internal sources, it is highly likely that Tesla is the company buying the land. Let's take a look at the estimated location and purchase details.
Shanghai land market site shtdsc.com has published information that state-owned land will be transferred to the use of some company, as reported by Tesmanian on March 1. According to the document, this 461,142.40 square meter site, which is located near Giga Shanghai, will be transferred to the company for the production of new energy vehicles (eg, EVs). The cost of one square meter of land with manufacturer facilities will cost the owner RMB14,925 (approximately $2,308). That is, the entire site with buildings will cost the owner a little over $1 billion.
T-Study/YouTube conducted a study and determined the estimated location of the site. The ad describes all four of its boundaries. Although there are only two exact street names (on the north and south of the site), after collecting extensive data on nearby land and road construction plans, the T-Study concluded that the new site is south of Giga Shanghai, on the other side of the river. The study also measured the area of the proposed site.
T-Study indicated that the land is still on auction and the tenders will be completed on March 29, however this does not mean that there is a risk that Tesla will not receive the land. Firstly, on this land, the company can only build a factory for the production of electric vehicles. The second important factor is that the established target income from this land is $11.5 billion per year. It will be extremely difficult to achieve such high profitability on such a small plot of land if the company is not very large and does not have an established supply chain in the region and sales market.
Although Shanghai has set very high demands of this land, Tesla is perhaps the only EV manufacturer that can handle them. According to research, cheaper EVs have a larger targeted market in China. Therefore, the new piece of land could be used by Tesla to produce a new, compact $25,000 model. According to the latest financial report for 2020, Tesla's revenue in China last year increased 123.6% over the same period last year. With a more affordable model on the market, revenue would likely only further skyrocket.
The land documents show that the construction of the site must be started within six months after the transfer of land for use, the construction of buildings must conclude within 30 months after the transfer of the land, and they must be put into operation within 36 months after the transfer of the land. This means that the project on the site should be completed within three years, which happens to be right in line with Tesla's plan for an affordable $25,000 model.
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