With capacity to build 500,000 cars per year
Last year, we reported that Tesla was in negotiations to build a factory in Shanghai. Typically, automakers are required to partner with a Chinese company in order to build and sell cars in the country, but Tesla was said to be working on an agreement that would allow it to skip that step. Almost nine months later, the Shanghai factory is finally official.
Reuters reports that Tesla CEO Elon Musk has reached an agreement with the Chinese government to build the California-based automaker’s first factory outside the U.S. Once construction begins, it will reportedly take about two years before the first vehicle rolls off the assembly line. Two or three years after that, the factory could be producing as many as 500,000 vehicles per year.
This announcement comes only days after China responded to President Donald Trump’s recently implemented tariffs with tariffs of its own. Vehicles built in the U.S. were among the goods targeted by China’s new tariffs. As a result, Tesla was forced to raise the price of the cars it sells in China.
“The Shanghai plant will certainly improve Tesla’s positioning in China and allow it to locally produce and avoid import tariffs. The relaxation of the 50/50 rule for JVs in China uniquely benefits Tesla because they did not have an existing JV in China,” Tasha Keeney, an analyst with ARK Invest, told Reuters.
In a statement, the Shanghai government said, “The Shanghai municipal government will fully support the construction of the Tesla factory.”
We’ve reached out to Tesla for a comment and will update this post if we receive a response.