Elon Musk Sees a Future in China for Tesla, and It’s Muddy

(Bloomberg) -- Standing in a vast field of muddy wasteland that wouldn't look out of place in an apocalyptic movie scene, Elon Musk exuded his usual mix of optimism and self-deprecating humor.

Musk had trekked to these inhospitable outskirts of Shanghai on a rainy Monday to break ground on Tesla Inc.'s first car-production site outside the U.S. And in typical Musk fashion, he was big on promises and can-do attitude, flanked by a phalanx of Chinese officials who are keen backers of Tesla's beachhead in China, the world's largest automobile market.

The build-up to the event was vintage Musk: a rapid-fire string of tweets bubbling with excitement, a dose of star power (his on-again, off-again girlfriend, the rapper Grimes, accompanied him on his China trip), and an aggressive timetable even for China's standards, where centralized planning isn't foreign to the concept of moonshot construction projects. Tesla wants the factory to start pumping out Model 3 cars by the end of the year.

For all the fanfare and official hobnobbing, Musk injected a dose of juvenile comic relief into the event. His eagerly-followed Twitter feed suddenly featured a new profile picture that showed the billionaire with a scribbled curly mustache so clumsily executed that it looked like a mischievious -- if harmless -- hack. A Musk spokesman later confirmed that the tweet was in fact real and authored by the main man himself.

The actual ceremony turned out to be far more down-to-earth, which is to say: in the mud. Heavy rain had pelted the region all morning, filling the barren and bulldozed field with deep streams of slush. A freshly laid strip of road cut through the wasteland, crowned by a Tesla-emblazoned red gate and dozens of corporate flags flapping in the chilly wind. On one side off the street in the distance, a bouquet of eight motionless blue cranes pierced the gray sky. Coats, umbrellas and rubber boots were coveted commodities. Despite nothing of discernible value on the ground, police were out in force to guard the area.

It's the kind of place nobody really wants to spend much time, but Musk was beaming. He was joined by local government dignitaries, including Shanghai's mayor, on stage, and the all-male attire was black and gray against a backdrop of the Tesla-red stage. The actual ground-breaking act had its moment of science fiction: where typically executives lift gleaming spades in varying degrees of discomfort to move a few morsels of earth, Musk and his entourage simply placed their hands on translucent pylons to complete the deed.

For an executive who has built his cult-like status in no small part by defying the odds and fighting the naysayers, there are few settings more fitting than this boggy field. Tesla wants to have initial construction completed by middle of the year and see Made-in-China cars rolling off the production line by the end of 2019. Capacity is for 500,000 units, for affordable versions of Tesla's Model 3 and Model Y for Greater China.

There's a lot riding on Musk's first car factory outside the U.S., which explains the rush. BMW, Mercedes and Audi all have plans to begin local production of electric SUVs. Musk has said that building locally is a key success factor, and the unresolved U.S.-China trade spat continues to be a major headache for any manufacturer producing in the U.S. and exporting to China. All told, Musk wants to sink $5 billion into the Shanghai facility, according to people familiar with his plans.

By the time the event was wrapping up, Musk's optimism had infected the locals.

“Rain represents fortune,” Shanghai's Vice Mayor Wu Qing said at the ceremony. “The rain today could predict that Mr. Musk and Tesla will make a big fortune here.”

To contact the reporters on this story: Benedikt Kammel in Berlin at bkammel@bloomberg.net;Yan Zhang in Beijing at yzhang1044@bloomberg.net

To contact the editors responsible for this story: Emma O'Brien at eobrien6@bloomberg.net, Sam Nagarajan