UPDATE 1-Tesla to break ground on Shanghai Gigafactory today, CEO Musk says

Tesla Inc will break ground on its Shanghai Gigafactory on Monday, Chief Executive Elon Musk said in a tweet https://twitter.com/elonmusk/status/1082103637990625281, formally starting construction of the U.S. electric vehicle (EV) maker's first Chinese plant as its ramps up its presence in the market. Progress on the $2 billion factory is being closely watched.

It marks a major bet by Tesla as it looks to bolster its presence in the world's biggest auto market where it faces rising competition from a swathe of domestic rivals and its sales have been hit by increased tariffs on U.S. imports. "Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today!" Musk wrote in a post on Twitter. Tesla has been pushing forward its plans for the plant after it secured the site in October, hiring staff, starting procurement for building materials and setting up a financial leasing company in the city.

The so-called Gigafactory would also be China's first wholly foreign-owned car plant, a reflection of China's broader shift to open up its car market even amid a whipsawing trade war between Washington and Beijing. Tesla plans to produce its Model 3 and Model Y cars in the initial phase of production at the Shanghai plant, with an annual capacity of 250,000 vehicles. China is the largest market for electric vehicles, and most forecasters predict EV sales in the country will accelerate rapidly as government regulation drives toward a goal of 100 percent electric vehicles by 2030.

(With inputs from agencies.)