Tesla has received bids for its second Gigafactory in China, the location of which will likely be revealed as early as this year.

The Liaoning government’s official Weixin account stated that there will be an infrastructure refresh in the Dadong District in Shenyang in order to stabilize infrastructure in anticipation of Tesla’s significant NEV project. Does this mean Tesla’s second Gigafactory in the country will be situated in Northeast China?

Tesla’s Chinese branch debunked the statement within a day, while Liaoning removed the post from Weixin. Even so, rumblings were already taking place.

Tesla operates a total of four Gigafactories around the world, including two production bases in Fremont and Shanghai, respectively, as well as Giga Berlin and Giga Texas, both of which will kick off production this year. Thanks to the first two factories, Tesla was able to reach an annual production of 940,000 vehicles for 2021 and potentially 1.5 million for 2022.

With all eyes around the globe on the two new factories, Tesla is not resting on its laurels. Musk indicated during the latest earnings conference that by the end of 2022 the company will confirm the newest factory’s location, which will impact the EV industry on a global scale.

Although Tesla’s Chinese branch denied rumors of Gigafactory construction in Shenyang, Liaoning, there is still a high probability that a second Gigafactory will be built in China, with several cities having emerged as the likeliest candidates.

Qingdao, Shandong and Yibin, Sichuan remain the two frontrunners, with Shenzhen, Wuhan, Hangzhou, and Zhenzhou trailing closely behind. Despite being a relatively smaller city, Yibin is home to a wealth of hydroelectric resources and to CATL’s multiple battery fabs currently under construction.

Compared to the other cities on the shortlist, Qingdao is attractive due to its proximity to the comprehensive upstream and downstream supply chains. What’s more, Qingdao’s location within the coastal regions aligns it with Tesla’s need to export Chinese-manufactured vehicles overseas. In addition, China’s rising demand for EVs makes it even more attractive for the company to build a factory in Qingdao.

Nonetheless, India represents a strong alternative to China as the former houses an enormous, albeit slightly trailing, market. Unlikely as it is to usurp China, India nevertheless possesses much potential.

Ultimately, Tesla’s choice in factory location hinges on two factors, that is, proximity to the supply chain vs. proximity to the market, as well as whether the local government can rapidly set policies in response to Tesla’s rapid decision making. If the new factory is indeed slated to be constructed in China, Tesla will definitely wish to replicate its experience building the Shanghai Gigafactory, and whoever can spare the needed software/hardware space for Tesla to operate will stand as the winning candidate.

 (Image: Tesla)