Tesla, to establish its first factory in China

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Tesla Motors is currently in talks regarding opening an electric car factory in Shanghai, China, in an attempt to strengthen its position in one of its major markets, as well as improve the country’s position as a build of electric cars, says The New York Times.

In a statement released this Thursday, Elon Musk’s company declared that they’re looking forward to opening more overseas factories, in order to build cars that customers could actually afford. And when it comes to China, this is an essential strategy, as the government keeps increasing taxes for imported cars.

Working hard to reach an agreement with China

“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,” one of the company’s spokespersons said.

If they eventually managed to open the Shanghai factory, a big part of Tesla’s production will remain in the United States, but it will significantly improve affordability for the markets they serve.

Currently, China represents 15 percent of the company’s revenue, according to a report from 2016, the total percentage doubling from 2015.

As for the Chinese officials, they still haven’t responded until now, even though some rumors claim that the automotive manufacturer and Shanghai have already signed a preliminary agreement. Still, this doesn’t guarantee that a plant will be built.

It’s all about the local laws!

In order for the project to become reality, Tesla must find a Chinese partner, for a joint-venture, following the examples of Chevrolet, Ford or Volkswagen, companies that make cars in factories owned alongside a local company.

However, they could also build a factory owned entirely by them, in a foreign trade zone in China, but this means that they will eventually have to pay 25 percent import duty for cars sold in the country, as the plant would be treated as one outside China, for trade purposes.

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