(Source: SH Observer)

The second phase of the Tesla Shanghai plant expansion project is currently on hold, Tencent News said Wednesday, citing people close to the plant.

The project covers an area of 461,100 square meters and is owned by the Shanghai Lingang District Management Committee. The site's auction failed several months ago when there was only one bidder, the report said.

signed a memorandum of cooperation with Lingang in July 2018, announcing the construction of its largest overseas factory outside the United States, the Shanghai Gigafactory, with a planned capacity of 500,000 units.

On Jan. 7, 2019, Tesla officially opened the Shanghai Gigafactory with a first phase capacity of 250,000 units. The plant is mainly used for the production of Model 3 and Model Y.

On January 7, 2020, Tesla delivered the Model 3 produced at the Shanghai plant to 10 Chinese consumers for the first time and launched the production of Model Y.

According to Tencent News, Tesla was previously required to invest RMB 14.08 billion over five years and achieve an output of more than RMB 75 billion by the end of 2023 and generate RMB 2.23 billion in annual tax revenue.

Otherwise, Tesla would have to hand over the land but would receive corresponding financial compensation regarding land rental, buildings, and equipment.

On April 28, Tesla made an announcement that it had repaid the $614 million loan related to the Shanghai factory expenses early and the related contract was terminated. After this, the unused $758 million under the fixed asset credit line in Tesla's debt and finance lease schedule will no longer be available.

A Reuters report on Tuesday mentioned that people familiar with the matter said Tesla has stopped buying land to expand its Shanghai plant due to uncertainty over tensions between the US and China.

The report said Tesla did not bid for a piece of land across the street from the Shanghai plant in March because it does not plan to significantly provide Chinese capacity, at least for now.

Tesla said in a statement to Reuters that its Shanghai plant is "on track.