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Asia Today ISSN 1861-4604 Sunday, May 27, 2018

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Tesla set to enter China with new factory in Shanghai

The Wall Street Journal

Share on Facebook October 24, 2017, Reporter : BNN, Reader : 510

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SHANGHAI, China - In a bid to enter the world’s largest market for automobiles, China - the California-based carmaker, Tesla is now said to have closed a deal with Shanghai to set up a new factory.

According to a report in The Wall Street Journal, Tesla, which confirmed in June this year that it was in talks to build a factory in Shanghai, has now closed a deal with Shanghai’s government to build a manufacturing plant.

The agreement by the electric-car maker led by Elon Musk, to produce vehicles in China for the first time, will involve a plant that the company will build in the Shanghai free-trade zone. 

Further, the report pointed out that Tesla will own the factory, rather than partner with a local manufacturer, as is typically the case. 

In June, a company spokesperson explained that while the company anticipated keeping most of its production in the U.S., it did “need to establish local factories to ensure affordability for the markets they serve.”

Now, with Chinese officials considering relaxing some of the more stringent rules concerning local partners, as a way to encourage electric vehicle manufacturers, Tesla’s reported arrangement would be the “first of its kind for a foreign automaker,” but will likely not allow Tesla to avoid a 25 percent import tariff.

China, over the last few months, has worked to encourage the development of a robust market for EVs. 

Last month, Xin Guobin, China’s vice minister of industry and information technology, said that the country is beginning to phase out sales of fossil fuel vehicles in a bid to cut emissions. 

He added that existing manufacturers will need to begin building more EVs over the next few years. 

Meanwhile, industry experts have stated that the deal in Shanghai will allow Tesla to reduce its production costs drastically.

Tesla has not made an official statement so far. 

 

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