US electric vehicle (EV) manufacturer Tesla Inc plans to build a 500,000 unit/year car plant in Shanghai, according to a memorandum of cooperation signed with Shanghai’s government.
The plant will be the city’s biggest-ever foreign-funded manufacturing project and the first vehicle manufacturer in the country to be majority foreign-owned. It will also be Tesla’s first car plant outside the USA.
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No details were released about the timing of the investment or the source of the funding, but it is understood that Panasonic will be the main partner for its lithium-ion batteries.
China is Tesla’s second-largest market after the USA and is by far the largest market for electric vehicles globally. It accounted for around 17% of Tesla’s global revenues last year, mainly from the sale of more than 15,000 cars.
Last week, Tesla hiked prices on its Model X and S cars in China by around 20% as the trade war between US and China continued to escalate.
China imposed additional import tariffs of 25% on a number US-made goods, including vehicles, on July 1st in response to similar moves made by the USA.
After cutting import tariffs on all foreign-made cars from 25% to 15% in May, tariffs on US-made cars jumped to 40% after the latest increase, according to local reports.
The basic Model S in China now costs CNY850,000 (US$129,000) compared with CNY710,600 previously and US$74,500 in the USA. The Model X is now priced at CNY927,000 – up from CNY775,600.
Other foreign vehicle manufacturers in China, including BMW and Daimler -which export vehicles to China from their US plants, are also expected to increase prices in response to rising import tariffs. Both German automakers are stepping up product localization in China.
