Tesla's Shanghai plant may be first wholly-owned facility in China

Reuters

In June Tesla confirmed that it was in talks to build it's own plant in China.

Tesla has reportedly reached a deal with the government of Shanghai to build a manufacturing facility in the region.

Persuading Tesla to manufacture cars within Shanghai, while at the same time pay tariffs on the same, would be a big coup for the government.

The new facility will be Tesla's first real footprint in China's fast growing electric auto market, with the company's current presence only coming in the form of sales offices. The deal is expected to exclude the kind of technology-sharing agreements that can prevent innovative worldwide companies from setting up shop there.

"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 U.S., we do not need to establish local factories to ensure affordability for the markets they serve".

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"Tesla is now working with the Shanghai government about details of the deal's announcement, such as timing", the WSJ added. Instead, Tesla will own the entire factory. While the automaker has sold its EVs in China for years, sales have sometimes struggled in a country where it faces an uphill battle between its outsider status and apartment-focused living (you can't buy an EV if there's nowhere to charge it).

Tesla has moved closer to being the first foreign automaker to have a manufacturing operation that is wholly owned in China. It was also previously reported in June that Tesla was looking at Shanghai and Guangdong for a plant to expand in China.

Chief executive of Automobility, a Shanghai-based consultancy and a formal Chrysler executive, Bill Russo said, "Whatever deal Tesla gets, others will want it too". It was also encouraging EV makers to build factories by opening free-trade zones. It is trying to increase the output of its new Model 3 sedan but acknowledged earlier this month that production bottlenecks had held third-quarter production to just 260 vehicles, well short of the 1,500 previously planned.

The Chinese government has identified new-energy vehicles as a strategic emerging industry and aims to boost annual sales of plug-in hybrids and fully electric cars 10-fold in the next decade.

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