Tesla Inc. reaffirmed it is talking with the Shanghai municipal government to set up a factory in the region and expects to agree on a plan by year end. However, the automaker declined to comment on a report that a deal has been reached.
China levies a
25 percent duty on sales of imported vehicles and has not allowed
foreign automakers to establish wholly owned factories in the country,
the world's largest auto market. Those are problems for Tesla, which
wants to expand its presence in China's growing electric vehicle market
without compromising its independence or intellectual property.
government has considered allowing foreign automakers to set up wholly
owned factories in free trade zones in part to encourage more production
of electric and hybrid vehicles -- which the government calls "new
energy vehicles" -- to meet ambitious sales quotas.
Tesla would still have to pay a 25 percent duty on cars built in a free trade zone, but it could lower its production costs.
on Sunday pointed to a statement it made in June that the company "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
A Tesla spokesperson in the United States declined to comment further beyond referring to the June statement.
The Wall Street Journal reported that Tesla and the Shanghai government have already reached a deal in
that city's free trade zone. Shanghai is China's de facto automotive
capital and a significant market for luxury vehicles of all kinds.
internet company Tencent Holdings has a 5 percent stake in Tesla
and is seen as a potential ally for Tesla's efforts to enter the Chinese
It was unclear if the Chinese government will conclude a
deal with Tesla to coincide with U.S. President Donald Trump's visit
Tesla CEO Elon Musk has said the company eventually will need vehicle and battery manufacturing centers in Europe and Asia.
is wrestling with production problems at its sole factory, in Fremont,
Calif. It is trying to accelerate output of its new Model 3 sedan, but
conceded earlier this month that production bottlenecks had held
third-quarter production to just 260 vehicles, well short of the 1,500