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China approves new Tesla plant in Shanghai

Auto News - Published on Wed, 11 Jul 2018

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Tesla announced an agreement with Chinese officials to build a new factory in Shanghai. According to the agreement, both parties will focus their cooperation on jointly promoting technology innovation and industry development, where the city of Shanghai will strongly support Tesla Shanghai. Through this, it is expected that Tesla Shanghai will achieve an optimized R&D, manufacturing, and sales operations that will contribute to its global business. This win-win cooperation further enhances Shanghai’s position as a world-class automobile manufacturing center.

A Tesla spokesperson said "We expect construction to begin in the near future after we get all the necessary approvals and permits. From there, it will take roughly two years until we start producing vehicles and then another two to three years before the factory is fully ramped up to produce around 500,000 vehicles per year for Chinese customers. Tesla is deeply committed to the Chinese market, and we look forward to building even more cars for our customers here. Today’s announcement will not impact our U.S. manufacturing operations, which continue to grow."

China is an extremely important market for Tesla. Sales in China accounted for about 17 percent of its revenue last year. Clearly, a 70 percent premium for its flagship vehicle is not a sustainable business model. But a Tesla factory in Shanghai could transform the company, bypassing tariffs and tapping into China's strong research and development capabilities as well.

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Posted By : Rabi Wangkhem on Wed, 11 Jul 2018
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