Tesla plans China plant with 500000 vehicle capacity

Tesla plans China plant with 500000 vehicle capacity

Tesla plans China plant with 500000 vehicle capacity

In what is Tesla's biggest step yet into an overseas market, the electric carmaker on Tuesday inked a deal to begin construction of a manufacturing plant in China capable of producing 500,000 cars a year.

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

"The Shanghai municipal government will fully support the construction of the Tesla factory", authorities said in a statement, which could help Tesla build the factory sooner rather than later.

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.

"I think that you'll see something similar to what they did in Nevada, with a partner like Panasonic", said Kallo, referring to the gigafactory that Tesla and its Japanese battery-cell supplier operate along near Reno.

The Associated Press reports this announcement comes on the heels of growing trade tension between the US and China, and Beijing's decision to stop restrictions on requiring outside automakers to work through locally-based joint ventures.

No financial details were announced.

The move is the earliest indication of how much higher Chinese tariffs on certain USA imports will flow through to buyers, with other automakers likely to follow suit or shift a greater portion of production to China.

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.

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

China presents a massive growth opportunity for Tesla and rivals such as BMW AG and Daimler AG, which are seeking to take advantage of a massive and fast-growing market for new-energy vehicles. The government's target is 7 million vehicles a year by 2025.

Musk had previously criticized China's tough auto rules for foreign businesses, which would have required it to cede a 50-percent share in the factory. That gave it about 3 per cent of the nation's battery-powered electric-vehicle market, placing it as the No. 10 brand in that segment. Revenues in the country doubled past year to more than $2 billion, accounting for nearly 20%of the company's total. Tesla is one of the first beneficiaries of this rule change.

When it added a second assembly line to produce more Model 3s, the company constructed a giant tent running out from the Fremont factory to produce more cars. The CEO has said that the company won't need to raise more money this year.

A basic Model S sedan, which sells for $74,500 here, will now cost a whopping $128,779 in China as a result.

"A factory in China will nearly certainly require an incremental capital raise", he wrote in a report to clients.

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