Tesla reaches agreement for China factory, reports say
- by Alan Olson
- in Markets
- — Oct 24, 2017
The electric vehicle maker reaffirmed on Sunday it is talking with the Shanghai municipal government to set up a plant in the region, and expects to agree on a plan by the end of the year. Wrote the Verge: "While the United States is still Tesla's largest market, China has vast potential thanks to the growing percentage of auto ownership and the country's effort to improve air quality and encourage sales of electric and hybrid vehicles".
Elon Musk's Tesla electric auto company is reported to have struck a deal with Chinese authorities to build a factory in Shanghai, opening up the world's largest automotive market to the fast-growing business.
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.
According to the paper, the Silicon Valley electric carmaker's wholly-owned manufacturing facility would be built in Shanghai's free-trade zone, citing unnamed sources with knowledge of the deal.
If the deal is in place, it could be the ticket to igniting Tesla's Chinese sales - and the company as a whole.
Since entering the Chinese market in 2014, Tesla has rapidly expanded its local operations, with China revenue in 2016 growing to $1.06 billion, a three-fold increase from the previous year.
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Tesla is now working with the Shanghai government about details of the deal's announcement, such as timing, one of these people said. Instead, Tesla will own the entire factory.
The Wall Street Journal reports that Tesla has signed off on a deal to set up a manufacturing facility in Shanghai, China. For electric cars, that import tariff is set at 25 percent.
The magazine's prediction that the Tesla Model 3, which has faced production bottlenecks, will have average reliability illustrates the challenges automakers face. It was also encouraging EV makers to build factories by opening free-trade zones. Past year in China more than half a million new-energy cars were sold.
However, under current rules, the electric vehicle manufacturer will still be subject to the 25 percent import tariff applied by the country's authorities.
China has the world's biggest market for electric vehicles.
