Tesla plans Chinese plant with 500,000-vehicle capacity

Image Source CNN

By building another factory in their second-largest market, Tesla could bypass the tariff war between the USA and China.

While Tesla has been working on setting up production in China for more than a year, President Donald Trump has been trying to bolster manufacturing in the U.S. Tesla follows Harley-Davidson Inc.in expanding outside the U.S., underscoring the urgency with which companies are moving to avoid damage from escalating trade disputes.

In the meantime, Tesla has reportedly hiked its prices for imported vehicles in China to offset costs of increasing tariffs.

Elon Musk, now traveling in Asia, signed an agreement Tuesday with officials in Shanghai to build a factory with the capacity to produce up to 500,000 vehicles per year.

Tesla and the Shanghai government have left out a crucial detail in announcing a groundbreaking deal for the biggest name in electric cars to build its vehicles in China: how much it's all going to cost.

Tesla didn't respond to a request for comment on the price rises.

Tesla will be allowing people in the USA and Canada to bypass a reservation process for the Model 3, according to a report.




"The Shanghai Municipal Government will give full support to the construction of Tesla's factory and strive to create a better environment and provide better services for the development of various enterprises in Shanghai, including Tesla". More than two years after the first reservations were taken for the least expensive Tesla auto, Elektrek reports the Model 3 design studio should be available to everyone starting on Tuesday.

Previous reports uncovered that a new business licence has been approved for a company registered by Tesla's set-up in Hong Kong.

In response to the 25 per cent tariff the US implemented on $34 billion worth of Chinese imports, the Asian superpower bumped its tariff on electric cars from 15 per cent to 40 per cent.

Musk was in Shanghai Tuesday, and the Shanghai government in a statement said it welcomed Tesla's move to invest not only in a new factory in the city, a center of the Chinese auto industry, but in research and development, as well. Bloomberg reported earlier that Musk, Tesla's chief executive officer, would be in the city for an event with the government on Tuesday.

China is an extremely important market for Tesla. The category - which includes battery-powered, plug-in hybrid and fuel-cell automobiles - reached 777,000 units a year ago and could surpass 1 million sales in 2018, according to the China Association of Automobile Manufacturers.

CNET reports that the tensions between the USA and China caused the electric auto maker to raise the prices on its Model S and Model X vehicles. The government's target is 7 million vehicles a year by 2025. The WSJ reports that China is Tesla's second-biggest market outside of the US and that it sold about 17,000 cars there in 2017 compared to the 50,000 stateside.

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