Tesla Motors is close to an agreement for producing its models in China, in a bid to boost the local competitiveness of the EV maker.
Tesla is negotiating with the city of Shanghai in order to build a new manufacturing facility in the Lingang development zone, with the agreement to be announced as soon as this week, Bloomberg reports.
Under China’s existing rules, Tesla would have to set up a joint venture with at least one local car maker in order to build a factory there, with its identity still not clear.
Local production is key for Tesla in China, where the company’s revenue tripled to more than $1 billion last year. Building their models locally will allow the EV maker to avoid the 25 percent import tax currently applied on its existing Model S and Model X and, more crucially, the upcoming Model 3, which is supposed to bring Tesla to the masses and contribute greatly in the Palo Alto-based manufacturer reaching its annual target of 500,000 vehicles.
Moreover, China is already the world’s largest market for electric vehicles since 2015, and the government is pushing ahead with an ambitious plan that will increase sales of PHEVS and EVs 10-fold over the next decade.
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