Tesla plans China plant with 500000 vehicle capacity

Posted July 11, 2018

A Tesla spokesperson confirmed the news to Ars Technica.

Tesla Inc TSLA.O Chief Executive Officer Elon Musk on Tuesday landed a deal with Chinese authorities to build a new auto plant in Shanghai, its first factory outside the United States, that would double the size of the electric vehicle maker's global manufacturing.

"According to the agreement, both parties will focus their cooperation on jointly promoting technology innovation and industry development, where the city of Shanghai will strongly support Tesla Shanghai", says a translated press release from the Shanghai Municipal People's Government provided to The Drive by Tesla. China has long pushed to capture more of the talent and capital invested by global automakers in advanced electric vehicle technology.

Tesla chief executive Elon Musk will meet with Chinese officialsBeijingnghai and Baijing this week.

More news: Grayson Allen, Trae Young tussled during NBA Summer League game

In a first for a foreign automaker, Tesla was allowed to open the factory without partnering with a Chinese company.

Tesla didn't respond to a request for comment on the price rises. It said vehicle production there should begin about two years later, and that it should then be another two to three years after that for the plant to reach its 500,000 annual car-production capacity.

The announcement came just as Tesla raised prices on its vehicles in China to offset the cost of tarrifs imposed by the Chinese government in retaliation for United States tarrifs recently levied on Chinese goods. 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.

But it registered a new electric auto firm in Shanghai in May after China announced that it planned to scrap rules on capping foreign ownership of new-energy vehicle (NEV) ventures by 2022. Construction will begin soon after approvals and permits are secured, and the first vehicles will roll off the line within roughly two years, a Tesla spokesman said in an email. But Tesla wanted to have full ownership of the future factory. A plant in China also reduces shipping costs and potentially makes sourcing components more economical. China until recently levied 25-percent tariffs on imported cars, and for decades automakers have been moving to build more vehicles in the markets where they are sold to neutralize currency shifts and trade policy reversals.

More news: GOP ex-Sen. Jon Kyl will be the 'Sherpa' for SCOTUS nominee

In November, Musk said Tesla was about three years away from starting production in the world's biggest auto market.

GM, Ford Motor Co., VW, Nissan and other competitors have announced ventures with local automakers to develop models for China's lower-income market.

Prices of Tesla vehicles sold in China have increased by over $20,000 thanks to the ongoing trade war between the United States and China. The timeline may have been accelerated by recent tarrifs, however, as well as Tesla's well-documented cash flow problems. 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.

Tesla sold 14,779 vehicles in China past year, according to data from LMC Automotive.

More news: Four boys rescued from flooded Thai cave