Shanghai Will Let Tesla Build 500K Cars a Year

Image Source RUNGROJ YONGRIT  EPA-EFE  REX  Shutterstock

Image Source RUNGROJ YONGRIT EPA-EFE REX Shutterstock

Amidst the overwhelming number of reservations it received for the Model 3, Tesla embarked on what could be called an "anti-selling" period for the Model 3, with Elon Musk highlighting the car's extended wait time and comparing the Model S favorably against the vehicle.

"Today's announcement will not impact our USA manufacturing operations, which continue to grow". -Chinese tension over technology and follows Beijing's April promise to end restrictions that required foreign automakers to work through local partners.

Tesla, which announced last June that it was in talks to build a plant in China, said it expects construction on the Chinese plant to begin "in the near future". "I'm not saying that Panasonic will be the partner, but you'll see someone step in there, and I think those details will be announced in the next one, two, three months". Shanghai officials describe it as the largest foreign-funded manufacturing project in Shanghai history.

Tesla Chef Executive Elon Musk signed the agreement at an event in Shanghai, which will be home to the plant.

Tesla shares rose 1.5 percent in US trading even as some analysts questioned where the money-losing company will get the capital required to build and staff such a large plant.

The move by the electric auto maker follows China's decision to slap new tariffs on American vehicles in retaliation forUS measures against $34 billion of Chinese exports. Despite that, China quickly became its No. 2 market after the United States. "Tesla is deeply committed to the Chinese market, and we look forward to building even more cars for our customers here".

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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.

Automakers are pouring billions of dollars into developing electric vehicle models for China.

Tesla probably will make the smaller Model 3 sedan and upcoming Model Y crossover in China, Musk said in November, rather than the pricier Model S or Model X that often sell for more than $100,000 in the US.

Sales of pure-electric passenger vehicles in China rose 82 percent previous year to 468,000, according to an industry group, the China Association of Automobile Manufacturers. China accounted for 17 percent of Tesla's 2017 revenue, according a filing with USA regulators.

The factory would be the automaker's second assembly plant and aimed at serving the alluring Chinese market. 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. The facility is slated to be Tesla's biggest outside of its factory in Fremont.

"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. Musk's company got around the encouraged/required partnership with a local Chinese company by opting to build in Shanghai's free trade zone.

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