'With the construction of the Shanghai factory, the faster the better (for Tesla)'.
The so-called Gigafactory would also be China's first wholly foreign-owned vehicle plant, a reflection of China's broader shift to open up its auto market even amid the whipsawing trade war.
The automaker aims to finish initial construction of the plant this summer and start Model 3 production by the end of the year, according to Musk.
Tesla has yet to give a price tag but the Shanghai government said it would be the biggest foreign investment there to date.
In a series of tweets on Monday, Mr Musk said plant would build "affordable versions" of the Tesla Model 3 - the carmaker's mass market vehicle - and its proposed Model Y for the Greater China region.
In typically iconoclastic style, the 47-year-old Musk changed his Twitter profile picture around the time of the ceremony to one showing his face with an exaggerated handlebar moustache drawn on it.
As a US -made vehicle, Tesla's cars in China have been subject to steep tariffs, and sales have suffered from the U.S.
The firm in July unveiled plans for what is Musk's biggest overseas move yet, saying the factory's eventual annual production of 500,000 vehicles would dramatically increase its output and allow more direct access to the world's biggest electric-vehicle (EV) market. Beijing has since dropped tariffs on some United States goods, allowing Tesla to slash the cost of vehicles to China. China remains the world's largest market for vehicles, particularly green ones.
"The high-end versions of the Model 3 - the price will still remain the same next year", Musk said Monday in an interview with Kanka News, an online news portal for government-run Shanghai Media Group. A key China PMI index fell below 50 in December to its lowest reading since May 2017, signaling weakening demand in the $12.2 trillion economy. All Model S/X & higher cost versions of Model 3/Y will still be built in U.S. for WW market, incl China, ' Musk said in another tweet, referring to the worldwide market.
China has raised import duties on US-made cars as part of the broader trade fight with the US.
A fully owned facility also would mean Tesla won't need to share its profits and technology with Chinese partners, unlike other foreign carmakers who are required to form a domestic joint venture.
Alan Kang, Shanghai-based analyst for consultancy LMC Automotive: "Tesla's sales [in China] have dropped over the past few months because of high prices caused by the tariffs".
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