Tesla Shanghai China Factory Confirmed … With A Twist

24 October, 2017, 01:08 | Author: Lora Ball
  • Robots assemble Model S Tesla’s 5.3-million-square-foot plant in Fremont CA. Source David Butow  For The Times

"Electric-car maker Tesla Inc. has reached an agreement to set up its own manufacturing facility in Shanghai, according to people briefed on the plan, a move that could help it gain traction in China's fast-growing EV market".

Tesla isn't commenting on the WSJ report, instead referring to a statement made in June regarding the company " working with the Shanghai Municipal Government" to setup manufacturing there. Tesla would still have to pay the 25 percent import duty, but it would retain full control and could likely offset the tariff with lower production and shipping costs. The trends show that China may soon be Tesla's strongest market, however, especially as the Chinese government looks to clamp down on emissions regulations and improve air quality in major city centers. The factory is to be set up in Shanghai's free-trade zone. The fact Tesla is entering into a different deal is a reflection of the global ambitions of China to dominate the electric-vehicle industry.

China is poised to become the world's largest electric vehicle market and the government has a positive attitude for the same.

Tesla is brawling with production problems at its main factory in Fremont, California. While the automaker has sold its EVs in China for years, sales have sometimes struggled in a country where it faces an uphill battle between its outsider status and apartment-focused living (you can't buy an EV if there's nowhere to charge it).

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"While we expect most of our production to remain in the USA, we do need to establish local factories to ensure affordability for the markets they serve".

Foreign car-makers traditionally partner with local manufacturers, but that will reportedly not be the case with Tesla. Currently, Tesla is on the hook for both the tariff and prohibitive shipping costs, both of which hamper the potential for further growth in what has rapidly become one of the world's most important vehicle markets. The influential magazine gave Tesla's Model S sedan an "above average" score.

The report did not offer details on when a deal might be announced. Chinese electric vehicle company BYD, which is backed by Warren Buffett, was the best-selling electric carmaker a year ago and sells seven models in the country.

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