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Tesla Inks Deal To Build EV Factory In Shanghai, China

24 October 2017, 12:41 | Sammy Green



The WSJ's article cites reports from people who have been briefed on the company's plans to build the plant. This arrangement, the first of its kind for a foreign auto maker, could enable Tesla to slash production costs, but it would still likely incur China's 25% import tariff. If the market for electric cars continues to soar, as Chinese officials hope it will, there could be other Tesla factories in China in the future.

Tesla had said in June that it was in discussions with the Shanghai government and that it would detail its China manufacturing plans by the end of the year.

The only option left is to produce in China's free trade zones where the government allows foreign automakers to set up wholly owned factories.

According to commentators, the move will allow Tesla to dramatically lower the cost of Tesla cars in China.

Chinese internet company Tencent Holdings Ltd has a five percent stake in Tesla and is seen as a potential ally for Tesla's efforts to enter the Chinese market.

Tesla is going worldwide, and it's reportedly headed to the world's biggest consumer of electric vehicles to build a new factory.

However, under current rules, the electric vehicle manufacturer will still be subject to the 25 percent import tariff applied by the country's authorities.

Tesla is brawling with production problems at its main factory in Fremont, California.

Tesla has opened its massive 50-stall Supercharger station that's located at the Lilac International Business Center in Shanghai, China. China is a leader in the manufacturing of electric cars.

"Tesla is now working with the Shanghai government about details of the deal's announcement, such as timing", the WSJ added.

But the best reasons for Tesla to build a factory in China are not company-specific.

Buyers from India waiting for the Tesla Model 3 are supposed to get their vehicles sometime in 2019.

The Chinese government has identified new-energy vehicles as a strategic emerging industry and aims to boost annual sales of plug-in hybrids and fully electric cars 10-fold in the next decade.

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