Tesla close to agreeing on China production?

Tesla is close to an agreement to produce vehicles in China for the first time, giving the electric car maker better access to the world’s largest auto market, reports Bloomberg.

Setting up local production is key for Tesla chief executive officer Elon Musk to continue growing in China, where Tesla’s revenue tripled to more than US$1 billion (NZ$1.38 billion) last year. Assembling vehicles locally would allow the company to avoid a 25% tax that renders Model S sedans and Model X sport utility vehicles more expensive than in the USA.

The agreement with the city of Shanghai would allow Tesla to build facilities in its Lingang development zone. It could come as soon as this week, sources say, who asked not to be identified because negotiations are private. Details are being finalised and the timing of the announcement could change, Bloomberg says.

Tesla would need to set up a joint venture with at least one local partner under existing rules and it isn’t immediately clear who that would be.

Tesla representatives at the company’s headquarters in Palo Alto, California, didn’t immediately respond to Bloomberg’s requests for comment. A Lingang spokesman also didn’t answer calls.

China has identified new-energy vehicles as a strategic emerging industry and aims to boost annual sales of plug-in hybrids and fully electric cars 10-fold in the next decade.
Government support helped China surpass the US in 2015 to become the world’s biggest EV market.