Tesla plans to open a manufacturing facility in Shanghai

Tesla, the global electric passenger vehicles makes, is in discussions with Shanghai’s local government to open a manufacturing facility in the city’s trade-free zone. It will be the first overseas manufacturing facility for the firm outside of US. Tesla will own the entire factory thus avoiding the need of partnering with a local manufacturer or supplier. That implies that Tesla will be able to cut some costs of production and ultimately the sale price of the electric vehicles it produces in China, but it will likely still be responsible for paying China’s 25 percent import tariff.

China has the world’s largest vehicle market and has aggressive targets for electric cars. The Chinese government is aiming to sell seven million electric vehicles a year by 2025. In September, the country ordered all car-makers operating in China to start making EVs by 2019. Tesla commented on the development by stating that “Tesla is working with the Shanghai Municipal Government to explore the possibility of establishing a manufacturing facility in the region to serve the Chinese market. As we’ve said before, we expect to more clearly define our plans for production in China by the end of the year. 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 need to establish local factories to ensure affordability for the markets they serve”.