Report: Tesla to Build Factory in China

Tesla is gearing up to launch its own manufacturing plant in Shanghai, reports The Wall Street Journal. According to people briefed on the plan, who remain unnamed in the story, the automaker has entered into an agreement with the local government to build a factory in Shanghai’s free-trade zone.

WSJ calls the deal “the first of its kind for a foreign auto maker.” Unlike other carmakers that partner with local manufacturers to build cars in China, Tesla will have its very own factory. It’s likely Tesla will be subjected to China’s 25-percent import tariff, although producing cars in Shanghai is key to helping the automaker reduce production costs as it serves the Chinese market.

As The Verge points out, China is eager to accelerate the adoption of EVs on its roads. In fact, it recently confirmed it wanted to eventually stop selling gas and diesel cars, much like France and Britain.

In truth, the news comes as little surprise. Earlier this year, Tesla admitted it was working with the Shanghai government on an agreement to build a plant. At the time, Tesla said that most of its production would remain in the U.S., however.

Last year, more than 15 percent of Tesla’s total revenue came from the world’s biggest auto market. The company’s revenue tripled to $1 billion in China, which could eventually become the company’s biggest market.

Source: The Wall Street Journal (Subscription required), The Verge, Bloomberg

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