Tesla CEO Elon Musk to meet Shanghai Communist Party boss Chen Jining amid talks of Gigafactory 3 expansion, sources say

Tesla chief executive Elon Musk is expected to meet Shanghai Communist Party secretary Chen Jining on Friday amid heightened speculation about an expansion of the electric-car maker’s production facilities in the mainland’s commercial capital.

Musk will fly in by private jet from Beijing on Wednesday evening as part of a high-profile China visit that comes as already fraught relations between Beijing and Washington sour further, according to three people with knowledge of his itinerary.

The meeting between the world’s second-richest man and Shanghai’s most senior official reflects an attempt by the city to draw more foreign investment after China reopened its international borders early this year.

A senior government official in Shanghai, who wished to remain anonymous, told the Post that the city is determined to further open up the local market and welcome top international brands even amid growing calls by some politicians in the West to reduce their countries’ reliance on China.

“A handshake between Musk and Chen will be more than a symbolic move,” said Gao Shen, an independent analyst in Shanghai. “Industry employees in China’s automotive sector are expecting Tesla to increase its investment in China, which will represent a renewed endorsement of the country’s electric vehicle (EV) market by the world’s most successful entrepreneur.”

The Shanghai government did not respond to queries from the Post on Wednesday, while Tesla would not comment on the issue.

Musk landed in Beijing on Tuesday and met China’s foreign minister, Qin Gang, on the same day.

Qin told him China will create “unprecedented growth potential and market demand” buoyed by its modernisation drive and goal of achieving common prosperity, according to a statement put out by the foreign ministry.

On the second day of his trip, the Tesla CEO visited the commerce ministry, and the ministry of industry and information technology, before his planned departure for Shanghai in the evening, according to the sources.

His journey and actions in Shanghai are sure to draw huge attention from the automotive industry and international investment community because of the important role of Tesla’s Gigafactory 3, its largest plant worldwide, in the city’s Lingang free-trade zone.

The Shanghai factory delivered about 440,000 vehicles to mainland Chinese customers in 2022, up 37 per cent from the previous year.

Including cars exported abroad, the Gigafactory churned out about 710,000 vehicles last year, more than half of Tesla’s total output of 1.31 million units.

The sources said it is unlikely Tesla will reach an agreement with Shanghai’s authorities during this visit about a further expansion of the plant.

Tesla, which started operating the Gigafactory 3 at the end of 2019, began drawing up plans to expand the facility early in 2022 amid strong domestic sales of its locally built Model 3 and Model Y cars.

But the carmaker put on hold the plans for a second assembly line after it failed to get approval from Chinese authorities, the Post reported on January 13. The new line was expected to double the Shanghai factory’s capacity to 2 million units a year.

China is the world’s largest automotive and EV market, with sales of battery-powered cars accounting for about 60 per cent of the global total.

Tesla spearheaded a recent price war between EV makers in China amid declining consumer demand for premium vehicles. Its deliveries in China have rebounded sharply in the past three months.