Tesla completes Shanghai data centre, innovation hub as carmaker joins elite US$1 trillion valuation club

Tesla, the first carmaker with a market cap of US$1 trillion, has finished constructing a data centre and research hub in China, quickening its localisation pace in the world’s largest electric vehicle market and bringing it into compliance with regulatory demands.

The company will do its utmost to ensure safety of car data under streamlined management, the US carmaker said in a statement on Monday evening. The announcement comes just five months after Tesla established a centre in Shanghai for storing operational data, to adhere to China’s tightened regulations on data related to intelligent vehicles.

The research centre in Shanghai will conduct development work on vehicles, charging equipment and energy storage products and will be eventually expanded to the same scale and scope as its US R&D operations, according to Tesla.

“Tesla has every reason to further invest in China due to the country’s huge untapped market potential,” said David Zhang, a researcher for the automotive industry at the North China University of Technology. “A deepened localisation drive will also benefit the carmaker in chasing faster growth here.”

Tesla did not reveal its investment in the two centres at Lingang, near its Gigafactory 3, where it assembles the Model 3 and Model Y vehicles. It also did not say if the data centre and R&D hub have started operating.

Tesla faced a backlash from customers and officials in China early this year over data security issues. Beijing has made it a requirement for foreign firms to store user data on its soil since 2017, when its Cybersecurity Law came into effect, but has stepped up implementation of late.

In April, the company released the data log of a Model 3 that crashed in February in Henan province to the car owner, bowing to a wave of criticism over its safety and quality standards on social media.

And in March The Wall Street Journal reported that Beijing had restricted the use of Tesla vehicles by military staff and employees of key state-owned companies over spying fears because of the use of cameras and ultrasonic sensors inside its cars.

Tesla chief executive Elon Musk immediately downplayed the concerns and dismissed speculation that its cars could be used for spying.

Tesla has been the runaway leader in the mainland’s premium electric vehicle (EV) segment since its Shanghai factory began operations in late 2019. The carmaker delivered 56,006 units last month, a near fivefold increase from a year ago.

China’s new-energy vehicle sector – which comprises pure electric, plug-in hybrid and fuel-cell cars – is expected to deliver 2.4 million units in 2021, more than double last year’s 1.17 million, according to the China Passenger Car Association.

Swiss bank UBS has forecast that three out of every five new vehicles sold in China by 2030 would be powered by batteries.

Tesla shares climbed 13 per cent on Monday to close at US$1,024.86, driving its valuation above US$1 trillion, after landing an order from car rental firm Hertz for 100,000 vehicles.