Tesla to build first overseas plant in China

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A woman sits in a Tesla Model 3 car during a media preview at the Auto China 2018 motor show in Beijing, China April 25, 2018. Source: Reuters/Jason Lee

LUXURY electronic vehicle manufacturer Tesla on Tuesday signed a memorandum of understanding with the local government in Shanghai to build a wholly-owned factory in the city.

It will be Tesla’s first manufacturing plant – which are known as Gigafactories – outside of the United States, and will produce 500,000 electric cars annually for the Chinese market.

Shanghai’s government said the venture will be the largest foreign-invested manufacturing project in the city’s history, reported China’s state news agency Xinhua. The factory will also house an electric vehicle R&D centre and is expected to be built within two years.

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Shanghai authorities said they would fully support the construction of the Gigafactory and work to improve the business environment for foreign-owned companies.

According to the Financial Times, CEO Elon Musk’s company will become the first foreign firm to benefit from a new Chinese policy to allow foreign car manufacturers to fully own their production facilities in China.

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“I would just like to express an order of appreciation to the Chinese government in that regard,” Musk was quoted as saying.

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Tesla Inc Chief Executive Officer Elon Musk and Shanghai Mayor Ying Yong attend a signing ceremony in Shanghai, China July 10, 2018. Source: China Daily via Reuters

The announcement comes as US President Donald Trump has triggered a major trade dispute with Beijing, partly because of claims China steals intellectual property from American firms under laws requiring part Chinese ownership.

The two economic giants imposed duties on some $34 billion worth of each other’s imports last Friday, with China accusing the Trump administration of starting the “largest-scale trade war.”

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As a result of higher tariffs imposed on certain US passenger cars by China, the price of Tesla cars rose this week by between $22,600 and $37,600 depending on the model, reported industry publication Electrek.

“Tesla is deeply committed to the Chinese market, and we look forward to building even more cars for our customers here,” the company told Electrek.

“Today’s announcement will not impact our US manufacturing operations, which continue to grow.”

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