Tesla Plans to Build its Electric Cars in China

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According to the Journal, Shanghai's government has given permission to Tesla to build the factory in the city's free trade zone, the first time that's happened for a foreign auto company.

As Tesla tries to reach Elon Musk's goal of producing 500,000 electric cars annually by the end of 2018, the company needs to expand its ability to actually build those vehicles. Not only is China the world's largest auto market, but the government has aggressively moved toward incentives and policy to support the adoption of electric vehicles. But China has now considered permitting foreign carmakers to establish wholly-owned plants in free-trade zones as part to encourage more production of electric and hybrid vehicles, which the government calls "new energy vehicles" to meet the sales quotas. Tesla would have to pay the 25% duty on cars and could drastically reduce its production costs.

In a statement, Palo Alto, California-based Tesla reiterated that it is working with Shanghai's government to explore local manufacturing. A Shanghai factory would not only make Tesla's vehicles more palatable, but could help it satisfy demand now that the Chinese EV market is truly heating up.

But - there's always a "but", isn't there? - not having a local partner means the cars produced in China will still be subject to the same 25% tariff that applies to all cars imported into China. In future we can see this in Shanghai's free-trade zone.

The company's well known vehicle models included Tesla Roadster, Tesla Model S, Tesla Model x and Tesla Model 3. A year ago in China more than half a million new-energy cars were sold.

Tesla does face the government of China which is autocratic and conservative in its outlook despite being a far cry from the communist regime of bygone times. In 2016, more than 40 percent of all the EVs sold globally were sold in China, and as Ars wrote in June, "the country also has 200 million electric two-wheelers, 3 million to 4 million low-speed electric vehicles, and more than 300,000 electric buses".

Tesla has opened its massive 50-stall Supercharger station that's located at the Lilac International Business Center in Shanghai, China.