Tesla Shanghai China Factory Confirmed … With A Twist


Tesla is looking forward to becoming the first vehicle company from another provenance to build its factory in China. Several previous reports of the company reaching an agreement to set up shop in China have proven to be mere speculation.

While the move would reduce Tesla's production costs, it will likely have to pay the 25% import duties that the Chinese government imposes on foreign auto makers, the WSJ report notes.

China has World's largest electric-vehicle market already and it is expected that it would continuously grow fast.

Tesla could be starting up a factory in China soon - in Shanghai's free trade zone, to be exact - and it could finally see improved sales in the country, whose market it has wanted to crack for so long.

A factory in China is particularly important for Tesla as the company ramps up production of its most affordable vehicle yet, the Model 3.

In a bid to gain traction in China's growing electric vehicle market, Tesla is setting up a manufacturing facility in Shanghai, according to the Wall Street Journal.

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The original Warehouse Agreement was dated August 17, 2017, with Deutsche Bank AG, New York Branch as administrative agent and has now been increased from $600 million to $1.1 billion, Tesla's filing with the Securities and Exchange Commission said. "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".

In June Tesla confirmed that it was in talks to build it's own plant in China. In the earlier times, some foreign automakers have built their cars in China, but now China wants local partners to avoid the 25 percent tariffs in building those vehicles.

Tesla will own the factory, rather than partner with a local manufacturer, as it typically the case. A year ago in China more than half a million new-energy cars were sold.

The Palo Alto, California-based carmaker is working with the local government on the timing and details of an announcement, the people told the newspaper.

It's hard for foreign vehicle makers to crack the Chinese market.

The electric auto maker hasn't confirmed the news yet, but it did reaffirm the promise it made in June, which is to outline its plans in the region before the end of 2017.