Tesla wants to finish building the new factory this summer, with production of Model 3s set for the end of 2019 and high-volume production to start in 2020.
The Shanghai-based Gigafactory should produce roughly 500,000 vehicles per year, much higher than most manufacturing plants producing from 200,000 to 300,000 units per year.
"Affordable cars must be made on same continent as customers," Musk tweeted on Monday.
— Elon Musk (@elonmusk) January 7, 2019
— Vincent (@vincent13031925) January 7, 2019
— Frank Chen (@Frankchen58910) January 7, 2019
— Phil Luttazi (@phil_luttazi) January 7, 2019
— Austin Barnard (@austinbarnard45) January 7, 2019
Tesla unveiled its first Gigafactory in 2016, which was initially a "tent" production facility in the Nevada desert. However, the company has built another in New York and plans to open another in Europe.
China-based manufacturing will help avoid sanctions from the Chinese government amid the US-China trade war, where the US imposed 25 percent import tariffs on steel and 10 percent on aluminium, and China slapped US exports with matching retaliatory sanctions. Beijing has since dropped tariffs on some US goods, allowing Tesla to slash the cost of vehicles to China.
The electric vehicle company welcomed the developments after enduring a series of gaffes and an FBI probe on allegations Mr. Musk had deceived company investors. The Trump Administration also slashed the standard $7,500 in federal tax credits to electric car buyers in order to phase out the incentive, leaving 3,000 units overstocked in the automaker's US inventory and compounding problems for the company, which had finally received its first profits since 2016.