Tesla to Set up Manufacturing Base in Shanghai, Report Indicates

Sam McEachern
by Sam McEachern

Tesla will set up a manufacturing base in China without a local manufacturing partner in the country, sources close to the matter told The Wall Street Journal.

The rumored new factory would be based in the free-trade zone of Shanghai. The company is said to be in talks with the Shanghai government over the matter, with a deal expected to be reached by year’s end.

In order to duck the 25 percent tariff on vehicles, the Chinese government requires automakers to find a local manufacturing partner, usually in the way of a fellow car company. If the Tesla agreement is reached, the EV maker would be the first foreign manufacturer to build vehicles in China without a local manufacturing partner. The automaker may still be subject to tariffs, however, as goods entering the country from a free-trade zone are still considered to have been imported.

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Tesla is intensely focused on the Chinese market, laying claim to 8.6% of the EV market share in China. According to Fortune, Tesla reported over $7 billion in revenue for 2016, with more than $1 billion of that coming from China alone. The United States was still its strongest market last year, with local sales accounting for $4.2 billion in revenue. The trends show that China may soon be Tesla’s strongest market, however, especially as the Chinese government looks to clamp down on emissions regulations and improve air quality in major city centers.

More information on Tesla’s manufacturing deal with Shanghai should become available in coming months.

[Source: The Wall Street Journal]

Sam McEachern
Sam McEachern

Sam McEachern holds a diploma in journalism from St. Clair College in Windsor, Ontario, and has been covering the automotive industry for over 5 years. He conducts reviews and writes AutoGuide's news content. He's a die-hard motorsports fan with a passion for performance cars of all sorts.

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