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Why Tesla’s Billion-Dollar China Play Is Key to Its Survival

Tesla Inc. is embarking on a Chinese expansion costing billions of dollars for a good reason: the country is set to remain the largest electric-vehicle market for decades to come, and Elon Musk has a long way to go if he wants to dominate it.

Demand for electric cars will continue to gain ground in what is the world’s fastest-growing auto and consumer market, as the government — which is cracking down on pollution and re-making its factory-led economy as high tech — favors them over gas guzzlers. Beijing has been pushing policy to fuel the rise of EVs, giving owners registration breaks and offering tax incentives for buyers. And while other countries are making inroads, China will remain the leader through at least 2040, Bloomberg New Energy Finance predicts.

Tesla, which has come under fire from investors for burning cash and its elusive profitability, said Wednesday it plans to use debt raised in China to fund its new factory near Shanghai, the first outside of the U.S.

The facility, known as the Gigafactory 3, is expected to churn out about 250,000 vehicles and battery packs per year initially — and that capacity will double over time. The first cars are expected to roll off the production line in about three years.

Bloomberg News reported earlier on Wednesday that the cost of the plant at full capacity would be $5 billion, citing a person familiar with the plans, who asked not to be identified as the matter is private. Later on a conference call, Musk said the cost for the factory to build 250,000 vehicles a year would be near $2 billion.

Continue Reading at Bloomberg.com

 Related: Apple Hits Historic Milestone – Here’s What Comes Next. 

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