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Tesla Reportedly Close To Operating Its Own Manufacturing Facility In China

Tesla Reportedly Close To Operating Its Own Manufacturing Facility In China

Shares of Tesla Inc (NASDAQ: TSLA) gained more than 1 percent early Monday morning after the company reportedly struck a deal with China to build new facilities in the country.

Tesla and the Chinese city of Shanghai reached a first of its kind agreement in which Tesla can build a wholly owned factory within the city's free-trade zone, The Wall Street Journal reported. Foreign automakers are typically required to partner with a Chinese manufacturer prior to setting up new manufacturing facilities in the country.

However, with this move, the Chinese government is likely signaling it's now open to easing restrictions in a bid to boost manufacturing of electric vehicles but may not be willing to go as far as to reducing or eliminating the 25-percent import tariff that Tesla would be subject to.

The WSJ report shouldn't necessarily come as a complete surprise as Tesla's ambitions to open a facility in the city of Shanghai were detailed in June of 2017. Tesla's CEO Elon Musk visit with China's Vice Premier Wang Yang one month prior may have also played a role in advancing negotiations between the two entities.

The electric automaker began accepting pre-orders for its Model S sedan in late 2013 and began delivering cars to customers in early 2014. By March 2015, Tesla saw a more than 100 percent month-over-month increase in sales.

Related Links:

Tesla's Opportunity In China Could Double On Relaxed Regulations

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