Tesla Inc. has reached a preliminary agreement with the Shanghai government to build a factory that'll rival production from its lone USA assembly plant, as Elon Musk takes his biggest step yet to expand overseas.
Tesla said Tuesday's announcement will not impact US manufacturing operations, which continue to grow. -Chinese tension over technology and follows Beijing's April promise to end restrictions that required foreign automakers to work through local partners.
"We expect construction to begin in the near future, after we get all the necessary approvals and permits". A Tesla spokesperson said in a prepared statement that after the plant opens, it would take an additional two to three years to sniff that mark of 500,000 vehicles manufactured annually.
"Shanghai will be the location for the first Gigafactory outside the United States", Tesla CEO Elon Musk said in a statement. Tesla and the Shanghai Municipal People's Government announced Tuesday they had signed the cooperative agreement.
Tesla shares rose 1.5 percent in early USA trading, even as some analysts questioned where the money-losing company will get the capital required to build and staff such a large 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.
China's tariffs are expected to hurt automakers, firms that make industrial components in the United States, and producers of soybean, whisky and other agricultural items.
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.
Automakers are pouring billions of dollars into developing electric auto models for China.
The China facility could give Tesla a fresh start in how it produces its vehicles, and an opportunity before building to create a more efficient system.
China is the world's biggest electric vehicle market, and automakers are pouring billions of dollars into developing models for it. Sales of pure-electric passenger vehicles in China rose 82 percent a year ago to 468,000, according to an industry group, the China Association of Automobile Manufacturers.
At the top of the range, the most expensive Model X crossover is now 1.57 million yuan ($240,000) up from about 1.32 million ($200,000) before. 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.