Tesla acquires land in Shanghai for new assembly line

Oct. 17 (UPI) -- Tesla has acquired more than 860,000 square meters of land in Shanghai for a new factory amid a trade dispute between China and the United States.

The U.S. electric carmaker's latest investment in China comes only months after it revealed plans in July it would build a Chinese factory with an annual production capacity of 500,000 units.

Tesla's future factory will sit on land in the Lingang Development Zone, east of Shanghai's central Pudong district, Chinese news site Pengpai reported Wednesday.

The minimum bid for the site was $140.5 million, but it is not clear how much Tesla ultimately paid to acquire the land.

The U.S. carmaker is expected to produce the Model 3, an entry-level sedan at the Shanghai plant, along with the Model Y, a new crossover vehicle that has yet to roll down the assembly line, according to Pengpai.

Tesla may be making a leap to the Chinese market to avoid risks that ensue from continuing international trade conflicts.

Last week BMW said it had increased its stake in its China joint venture, paying $4.2 billion to take over its Chinese operations.

"China is quickly becoming an important development and production base for BMW new energy vehicles," BMW chief executive Harald Krueger said.

CNBC reported Tesla could produce its first cars in three years. Maritime transport costs and tariffs currently place the carmaker at a 55 to 60 percent cost disadvantage relative to domestic competitors.

Nio, known as the "Tesla of China," is accelerating production, according to CNBC.

China has placed retaliatory 40 percent tariffs on U.S.-made cars in response to U.S. penalties on Chinese goods.