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Tesla Inc. on Monday inaugurated a factory in Shanghai, a first outside the United States.
CEO Elon Musk said on Twitter on Monday that the company would begin production in China of its model 3 and a planned crossover by the end of the year.
Tesla announced in July its intention to build the Gigafactory 3 facility in China, the largest electric vehicle market, despite trade tensions between Beijing and Washington. This followed Beijing's announcement to end the restrictions imposed this year on foreign ownership of electric vehicle producers in order to boost the development of the industry.
"Today, we can not wait to start work on @ @ Gigla Shanghai @Tesla!" says Musk on Twitter. "In order to complete the initial construction this summer, start production of Model 3 by the end of the year and reach a high production volume next year.
CCTV, China's state-owned television channel, showed Musk and other Tesla representatives and local officials to attend an icy ceremony in the rain on Monday in the suburbs of Shanghai.
The Shanghai factory will produce "affordable versions of 3 / Y for Greater China," Musk said. The company refers to a planned cross that has not yet received an official name as Y.
More expensive models will be built in the United States for export to China, said Musk.
Tesla, based in Palo Alto, California, of global automakers such as General Motors Co., Volkswagen AG and Nissan Motor Corp. invest billions of dollars in electric vehicle manufacturing in China.
Local production would eliminate the risks associated with customs duties and other import controls. This would help Tesla develop parts suppliers to service and make its vehicles more attractive to major Chinese buyers.
Tesla said in October it signed an agreement for a 210-hectare (84-hectare) site in Lingang District, southeast of Shanghai.
Shanghai is a center of the Chinese auto industry and the headquarters of Shanghai Automotive Industries Corp., the leading local manufacturer of GM and VW.
Tesla has not yet announced the price, but the Shanghai government said it would act as the largest foreign investment made to date.
The company faces competition from Chinese brands, including BYD Auto and BAIC Group, which already sell tens of thousands of hybrid and 100% electric sedans and SUVs every year.
Until now, foreign builders wishing to manufacture in China had to work with partners belonging to the state. Foreign brands have been reluctant to introduce electric vehicle technology in China to avoid sharing it with potential competitors.
The first of the new electric models developed by global automakers to market, Nissan's Sylphy Zero Emission, began rolling out of a production line in South China in August.
The low-cost electric models of GM, Volkswagen and other global brands are expected to hit the market from this year, long before Tesla is operational in Shanghai.