Tesla to open factory in Shanghai with annual capacity of 500,000 cars

Tesla to open factory in Shanghai with annual capacity of 500,000 cars

Tesla to open factory in Shanghai with annual capacity of 500,000 cars

Avoiding tariffs would deliver a significant boost for Tesla, as just last week the country's government raised the import duty on USA -made vehicles to 40 percent. A Tesla spokesperson confirmed the news to Ars Technica.

Tesla and the Shanghai government have reached a preliminary agreement to establish a Tesla factory over there.

Chief Executive Officer Elon Musk sealed a crucial agreement Tuesday to start building its second auto assembly plant in the world. But a Tesla factory in Shanghai could transform the company, bypassing tariffs and tapping into China's strong research and development capabilities as well.

Tesla and Shanghai authorities did not immediately respond to requests for comment.

Elon Musk, now traveling in Asia, signed an agreement Tuesday with officials in Shanghai to build a factory with the capacity to produce up to 500,000 vehicles per year.

He added that Tesla could lose market share to Chinesecompetitors, such as NIO, as a result.

Tesla released its eagerly-anticipated second quarter report on vehicle production and deliveries today, as it passed a crucial production milestone for the Model 3 sedan.

The plant will start producing cars two or three years after construction begins, according to Reuters, with an eventual capacity of 500,000 cars per year.

After the latest tariffs that the USA slapped on China and the Chinese retaliatory tariffs last week, Tesla raised over the weekend the prices of its Model S and Model X on the Chinese market by between US$22,700 and US$38,000 (150,000 yuan to 250,000 yuan), depending on the version, Electrek reported earlier this week.

The announcement comes amid mounting U.S. The WSJ reports that China is Tesla's second-biggest market outside of the USA and that it sold about 17,000 cars there in 2017 compared to the 50,000 stateside.

But it registered a new electric auto firm in Shanghai in May after China announced that it planned to scrap rules on capping foreign ownership of new-energy vehicle (NEV) ventures by 2022.

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Tesla hiked prices in China over the weekend to a level more than 70 percent higher than in the United States amid mounting trade frictions between Washington and Beijing that have seen several US imports, including cars, become subjected to retaliatory tariffs of 25 percent.

Tesla sold 14,779 vehicles in China previous year, according to data from LMC Automotive.

Auto brands in China are required to make electric vehicles at least 10 percent of their sales starting next year or buy credits from competitors that exceed their quotas. Work toward getting the factory built has gained urgency as Donald Trump engages in a trade war that's ensnared imports of the company's vehicles into China.

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