Tesla Inc. is close to securing a piece of land in Shanghai for its first overseas factory, Bloomberg reported Oct. 10, citing sources.
According to the news wire, the electric-car maker is the lone bidder for a parcel of land priced at 1 billion Chinese yuan. Sources said the Shanghai government could decide as early as this month to grant the piece of land to Tesla.
The company signed a deal in July with the Shanghai government to construct its first factory outside the U.S. A Tesla spokesperson told S&P Global Market Intelligence then the company expects to start producing vehicles about two years after construction begins at the plant.
Tesla said the facility will augment production and will not affect U.S. manufacturing operations. The Shanghai plant is expected to have an annual output of 500,000 vehicles within two to three years after the facility's opening.
During a post-earnings call in August, CEO Elon Musk said that the factory is expected to cost around $2 billion and would be funded largely through locally placed debt.
The development comes the same day it was reported that outgoing 21st Century Fox Inc. CEO James Murdoch is the leading contender to replace Musk as chairman of the electric vehicle company. Tesla did not immediately respond to S&P Global Market Intelligence's request for comment, but Musk later tweeted a response to the Financial Times' Twitter post of its Murdoch report that stated: "This is incorrect."
As of Oct. 10, US$1 was equivalent to 6.92 Chinese yuan.