Economy

Tesla heads to China to build 500000-capacity carmaking plant

Tesla heads to China to build 500000-capacity carmaking plant

Since then, production in China has become even more crucial: Last week, in response to tariffs imposed by the U.S., China increased the import duty on U.S. -made cars to 40 per cent, prompting Tesla to raise prices. A Tesla spokesperson confirmed the news to Ars Technica.

Tesla has finally signed a formal agreement with Shanghai officials to build its first factory in China.

The quest to construct its third so-called gigafactory gained urgency as Donald Trump has engaged in a trade war that's ensnared imports of Tesla's vehicles into China. Tesla and the Shanghai Municipal People's Government announced Tuesday they had signed the cooperative agreement. Tesla is now in "production hell" trying to build its affordable Model 3 sedan at its existing factory in Fremont, California, although the company recently hit its internal goal of producing 5,000 Model 3s in a week.

Tesla did not respond to a Reuters request 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.

The announcement came just as Tesla raised prices on its vehicles in China to offset the cost of tarrifs imposed by the Chinese government in retaliation for USA tarrifs recently levied on Chinese goods.

Its basic Model S sedan in China now costs about 849,900 yuan ($128,779), versus 710,579 yuan in May, while a Model X sport-utility vehicle costs about 927,200 yuan, versus 775,579 yuan, according to Tesla's website. The WSJ reports that China is Tesla's second-biggest market outside of the US and that it sold about 17,000 cars there in 2017 compared to the 50,000 stateside.

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The move is the earliest indication of how much higher Chinese tariffs on certain USA imports will flow through to buyers, with other automakers likely to follow suit or shift a greater portion of production to China.

Tesla will be allowing people in the USA and Canada to bypass a reservation process for the Model 3, according to a report.

The Chinese plant announcement comes just after Tesla raised prices on its cars in China by more than 70 percent higher than those it sells in the United States.

BMW exported about 81,000 cars from a plant in SC to China a year ago, generating about $2.4 billion in sales. Musk added that he wants the Tesla factory to add to what he called "the beauty and energy of Shanghai".

Musk has also said the company will reveal plans near the end of 2018 to build a factory in Europe. The company ships more than 15,000 cars a year to China. That gave it about 3 per cent of the nation's battery-powered electric-vehicle market, placing it as the No. 10 brand in that segment.


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