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Tesla in talks over Chinese manufacturing

Tesla Model S on the production line at the company's Fremont factory. Source: Steven Jurvetson CC 2.0

Company in discussion with Shanghai government over establishment of Chinese facility

As if Tesla didn’t have enough on its plate during 2017 with the launch of the Model 3 and development of the Semi, progress to establish more foreign production sites is also underway.

Following news that Elon Musk was in talks with the Indian government over import taxes, in the hope that the company may begin selling into the country, it has also confirmed it is in talks with the Shanghai government to build a manufacturing plant in China.

Doing so would help the carmaker avoid a 25% tariff on imported vehicles, as well as granting it greater capability of to service the largest EV market in the world. Not that it is struggling there; in 2016, it reported US$1 billion in revenue in revenue from China alone.

It has confirmed however, that cars would not be made in China for export.

No time line has yet been specified but according to a full statement received by Reuters and Elektrek, we should hear more by the end of the year:

“Tesla is working with the Shanghai Municipal Government to explore the possibility of establishing a manufacturing facility in the region to serve the Chinese market. As we have said before, we expect to more clearly define our plans for production in China by the end of the year. Tesla is deeply committed to the Chinese market, and we continue to evaluate potential manufacturing sites around the globe to serve the local markets. While we expect most of our production to remain in the US, we do need to establish local factories to ensure affordability for the markets they serve.”

Neither has it commented which models would be built in China, although speculation has already begun, suggesting that the Model 3 and upcoming Model Y would be the likeliest options.

The move makes sense if Tesla intends to sell as many Model 3s in China as it would like to in the US. Synergies could also be had with battery partner Panasonic, which opened its first automotive battery plant in China, in Dalian, around 1,000km north of Shanghai.

 

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