Tesla Motors is currently in discussion with authorities to build an electric car factory in Shanghai, China. According to New York Times, it is part of their efforts to keep China as its major market and to help the country boost its reputation as an electric car maker.
Elon Musk's Electric Car Company is aiming to expand its market by building more overseas factories in order to make Tesla cars more affordable to local consumers. This will make Tesla cars more affordable in China, a country known for its high tariffs for imported vehicles.
Tesla factory in China
In a recent statement given by a Tesla spokesperson to the media, it was revealed that the company is negotiating with the Shanghai Municipal Government. The talks are focused on the possibility of building manufacturing plants in the area specifically geared towards servicing the Chinese market. This move confirms Tesla's commitment to the Chinese community. But the company assured that it is also continuously assessing other sites for potential factories around the globe.
Despite the confirmation of the discussions between Tesla and Shanghai, there is no final decision yet if a Tesla plant would be built in China. According to the electric car company, as of today, most of the production still remain in the U.S.
But they emphasized the need to establish local factories citing their intent to make Tesla cars cheaper.
China a prolific electric car market
Reports say that China contributed 15 percent of Tesla's 2016 revenue, double the amount from their contributions in 2015. This could be the reason why Tesla is aggressively putting efforts to build a factory in Shanghai.
China remains mum about the matter when asked for comments.
Meanwhile, Bloomberg reported that Tesla and China have already signed a preliminary agreement to manufacture electric vehicles in China for the first time. In doing so, Musk's electric car company will eliminate 25 percent of the import tariff.
However, an agreement does not guarantee that an electric car company would be built.
Under Chinese laws, a foreign company needs to tie up with local manufacturers to put up a business in the country.
It is not clear who Tesla is eyeing but reports say that the city of Shanghai controls SAIC Motor Corporation, a known automaker. SAIC Motor is also a partner of Volkswagen. But when asked for comments, SAIC also declined to answer.
Experts in the automotive industry say that the plan is attractive for both Tesla and China. Due to worsening air pollution in China, the country has been pushing to become one of world's top electric car maker. Recent reports also say that China is aggressively increasing its efforts to fight climate change.
