Tesla Plans 500,000 Cars-A-Year Factory In China

Tesla plans to build a manufacturing plant in China with a capacity to produce 500,000 vehicles annually, and is expected to sign a preliminary deal on the matter with local entities in Shanghai these days, Bloomberg reported on Tuesday, quoting people familiar with the plans.

Elon Musk is expected to visit Shanghai and Beijing this week at events with representatives of the Chinese government, Bloomberg reported earlier this week.

Musk has been hoping to put a Tesla factory in China for years, but until recently, reports suggested that Tesla and China disagree over the future ownership of a Tesla factory in Shanghai. China has insisted that all vehicle-manufacturing plants should be joint ventures with local partners, and currently all foreign carmakers must have a Chinese partner to manufacture vehicles locally. But Tesla wanted to have full ownership of the future factory.

In April this year, however, China said it would be removing the 50-percent foreign ownership cap for electric vehicle (EV) and plug-in hybrid car manufacturers as early as this year, in a move that would benefit Tesla enormously, which doesn’t have local manufacturing and imports all the vehicles it sells on the Chinese market—the world’s biggest EV market.

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Musk’s visit to China and a potential deal on a Chinese factory for Tesla is coming at a crucial moment for the U.S. EV maker, which has reportedly had to significantly raise the retail prices of the vehicles it sells in China, due to the latest tit-for-tat trade tariff spat between the United States and China.

After the latest tariffs that the U.S. slapped on China and the Chinese retaliatory tariffs last week, Tesla raised over the weekend the prices of its Model S and Model X on the Chinese market by between US$22,700 and US$38,000 (150,000 yuan to 250,000 yuan), depending on the version, Electrek reported earlier this week.

By Tsvetana Paraskova for Oilprice.com

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