It can be difficult for foreign car manufacturers to crack the Chinese market. However, according to people close to the plans, Tesla, Inc. (NASDAQ:$TSLA) has reached an agreement to set up its own manufacturing facility in Shanghai, China. Many speculate that the move will help the electric-car manufacturer gain traction in China’s fast-growing electric vehicle (EV) market.
So what do we know about the deal?
As of right now, we know that the deal with Shanghai’s government will allow the Palo Alto-based company to create a wholly owned factory in Shanghai’s free-trade zone, the people briefed on the plan said. This deal is the first of its kind for a foreign auto manufacturer, and it is thought that Tesla will be able to cut production costs, but it would still likely face China’s 25% import tariff.
Tesla is working with the Shanghai government to finalize the details of the deal’s announcement, such as timing. The effort comes as President Trump – who has strong opinions on China’s trade policies – prepares to visit Beijing early November.
A spokesman for the auto company did not have a comment beyond echoing the company’s previous statement in June that it planned to “clearly define” output plans in China by the end of 2017.
Featured Image: depositphotos/@philipus
