Tesla Inks Deal To Start Manufacturing Cars In China

Later, the electric auto manufacturer confirmed the development to build a factory in Shanghai to manufacture its cars locally for the very first time. According to the news report, Tesla would likely still face 25 percent import duties on its factory-produced cars sold in China. If the market for electric cars continues to soar, as Chinese officials hope it will, there could be other Tesla factories in China in the future.

Tesla could be starting up a factory in China soon - in Shanghai's free trade zone, to be exact - and it could finally see improved sales in the country, whose market it has wanted to crack for so long.

Tesla had said in June that it was in discussions with the Shanghai government and that it would detail its China manufacturing plans by the end of the year.

Electric auto firm Tesla Inc (NASDAQ:TSLA) may well see its shares in focus on Monday after news at the weekend that the group has struck a deal with the Chinese government in Shanghai to build a production facility in the city's free-trade zone.

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Tesla would not be entitled to tariff waivers by setting up a plant in the free-trade zone, the Journal report said, but it would reduce shipping costs. "While we expect most of our production to remain in the USA, we do need to establish local factories to ensure affordability for the markets they serve".

China has set ambitious aspirations to accelerate significantly the electric-car sector, aiming to reach a 10-fold increase in sales of plug-in hybrids and fully electric cars.

There have been ongoing rumors about Tesla striking a deal with Shanghai, and it had initially been reported by Bloomberg in June. Sources with knowledge of the matter told the Wall Street Journal that Tesla will not be partnering with a local manufacturer as is the norm in China. Tesla Plans to build its electric cars in China. In August, Tesla announced a $1.5 billion bond offering purportedly to ramp up production on the Model 3. The proposed plant in Shanghai which is China's de facto automotive capital will be manufacturing Tesla models for Asian markets. It could also help curry favor with the Chinese government, which has indicated that it might impose aggressive policies to favor electric vehicles over internal combustion cars in the future.

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