No drones! Tesla’s Shanghai construction site has received all the attention it wants

“No drone recordings. Violators will be prosecuted.” Picture courtesy JL Warren

Electric carmaker Tesla successfully is building a car factory in Shanghai, China — successfully for government-owned real estate developers, that is. Some 60 kilometers from downtown Shanghai, Tesla’s China factory is going up in an industrial park that is part of an artificial city built into swamp and reclaimed land at the southeastern tip of the Pudong peninsula, and Tesla finally is bringing sorely needed attention to the area. There are signs —literally— that Tesla could use a little less attention.

Formerly named Lingang New City, and later renamed Nanhui New City, the artificial town was planned to become home for some 800,000 residents, but it proved to be a hard sell, and Nanhui joined the ranks of China’s infamous ghost cities. Media started to write that the futuristic wannabe-metropolis looked like the set of The Walking Dead. So China did a little command-urbanization. State-owned enterprises were ordered to move offices to Nanhui, and when that was too slow, universities were commanded to build campuses for 100,000 students.

While that filled some of the empty apartments and seats on the newly built subway, Nanhui kept suffering from a lack of attention. Even as a ghost city, Nanhui could not compete with infamous Ordos, or Meixi Lake City near Changsha. To become known by the world, Nanhui needed a celebrity anchor tenant.

High profile and notoriously short of money Tesla was the perfect match. Shanghai banks were ordered to dangle extremely loose credits in front of cash-hungry Tesla, and the Chinese government accelerated long-held plans to change its joint venture rules, making it possible for Tesla to become China’s first 100% foreign-owned carmaker.

In January, Tesla broke ground for its Shanghai factory, and ever since, the erstwhile set of The Walking Dead has become the center of world attention. Tesla’s construction site probably is the most-covered in the world. YouTube bursts with videos of cranes, and the amount of drones aloft may soon necessitate a dedicated air traffic controller.

While the sudden attention is good for the government-owned development, the factory will only help Tesla once it makes cars that avoid high tariffs. Tesla’s projections that the factory will make cars by the end of the year are taken with a large ladle of salt by the investment community. Large banks and brokerages are keeping an eye on the construction site by way of China-focused JL Warren equity research firm that has posted observers outside of the fence.

JL Warren clients receive exclusive videos, along with the advice by JL Warren partner Jungheng Li that there are “visible signs of rapid construction progress by Tesla in Shanghai. Main framework is in place. Construction workers from two contractors – Shanghai Construction Group and Shanghai Baoye – told us that 10 hours per day are the norm, and some days they work overtime up to 15 hours.”

JL Warren’s observers detected something else: A big sign on the fence, announcing in red Chinese letters: “No drone recordings. Violators will be prosecuted.”

Success! The construction site has received all the attention it wants.

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