Tesla to Build Factory in China

Tesla has reached a deal to build a factory in China

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.

A driver uses Tesla's charging station in Xi'an, capital of Shaanxi province.

According to the Wall Street Journal (subscription required), Tesla will build its first factory outside the U.S. in the free trade zone outside Shanghai, China.

But it referred to a statement the company made in June, which stated, "Tesla is working with the Shanghai Municipal Government to explore the possibility of establishing a manufacturing facility in the region to serve the Chinese market". It's likely Tesla will be subjected to China's 25-percent import tariff, although producing cars in Shanghai is key to helping the automaker reduce production costs as it serves the Chinese market. At the time, Tesla said that most of its production would remain in the US, however.

Usually, the trend is that while exploring a new market the foreign auto manufacturers partner with the local vehicle makers. As we've said before, we expect to more clearly define our plans for production in China by the end of the year. So far Tesla has 700 charging posts in 170 Chinese cities.

But if the details of the WSJ report are borne out, Tesla will become the first foreign automaker to open a factory in China without a joint-venture with a domestic company.

China already has the most electric passenger vehicles in the world.

Tesla is nearing a plant in China (Image: Tesla). Tesla will be the first to take advantage of the new policy.

Last week Tesla announced that it has modified the charging hardware on Tesla vehicles built for the Chinese market so that they can make use of the public charging infrastructure in the country.

Zhang said the move will also help boost China's new energy auto sector as a whole.

Shanghai-based Tesla Model S owner Jason Man verified with Teslarati that he was able to charge at the underground Supercharger station on Monday afternoon local time.

Tesla has seen a boom in China sales over the past year, seeing revenue triple to $1 billion in the country.

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