Tesla clinches deal to build new factory in China

A report from The Wall Street Journal claims that Tesla has come to an arrangement with Shanghai’s government in order to build a new manufacturing plant within the city’s free-trade zone. The WSJ’s article cites reports from people who have been briefed on the company’s plans to build the plant.

In a statement made earlier this year, a Tesla spokesperson said:

“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 not need to establish local factories to ensure affordability for the markets they serve.”

What’s interesting about this deal is that Tesla will own the factory; typically, companies have to partner with a local manufacturer, but not Tesla. Despite being the first foreign car maker to be granted the right of owning its own factory, it’s unlikely that the company will be able to escape from the 25 percent import tariff.

China has made its intentions clear that it wants to phase out sales of fossil fuel vehicles in order to cut emissions; with that decision, plus the one to allow Tesla its own factory, the company is in a prime position to tap into the 1.4 billion person market.

Source: The Wall Street Journal via The Verge

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