Tesla delays Shanghai Gigafactory expansion after failing to get government approval
- Chinese authorities have withheld permission for reasons that have not yet been made public, two sources said
- The second assembly line at Shanghai’s Lingang free-trade zone would have doubled Tesla’s capacity in China to 2 million units
The Texas-based EV maker had originally planned to double the plant’s capacity to 2 million units a year, but two sources with knowledge of the matter said Tesla had yet to receive the go-ahead from the mainland authorities to start construction. Authorities have not disclosed the reason for withholding permission.
Some government officials are concerned about data security because of Tesla’s connections to Elon Musk’s internet-from-space initiative Starlink, which was mentioned as a reason for Beijing’s reluctance to approve the expansion, Reuters reported on Thursday citing unidentified people.
Tesla did not respond to the Post’s queries immediately.
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Musk is the CEO of both Tesla and Space Exploration Technologies that launches Starlink satellites.
“Weak demand [for their cars] could be another key reason for the delay [of the expansion],” said Chen Jinzhu, CEO of Shanghai Mingliang Auto Service, a consultancy. “It does not make sense if a carmaker expands production but the vehicles cannot be sold.”