Tesla Signs Deal For Gigafactory In China
OCT 25 2017 BY STEVEN LOVEDAY
According to the Wall Street Journal, Tesla has reached an agreement to build a factory in China.
If this comes to fruition, it will be the first time a foreign automaker has secured such a deal in the country and will benefit Tesla significantly due to decreased production costs and not having to split profits. In China, in order to be approved for manufacturing, automakers must have a partnership with a local company and share profits and technology. Companies are also issued a 25 percent tariff.
According to WSJ, this deal allows for Tesla to have a “wholly owned” factory, which will work around the typical “partnership” situation. However, the deal may not waive the 25 percent tariff.
We’ve reported several times about the automaker’s plans to build a factory in China. Just a few months ago, we received news from Bloomberg that the automaker’s manufacturing facility with China was a done deal. Then, in an update, Tesla confirmed that a deal was in the works, but not yet official.
Tesla has been working with officials in China in an attempt to gain some wiggle room with local laws. The automaker is well aware that its vehicles will prove successful in the country (as they already have) and hopes that new rules can be adapted for electric vehicles. The WSJ is reporting that Tesla has found its workaround and will be able to construct its factory in Shangai, in the country’s free-trade area. The language in the WSJ reports (via Electrek):
“The deal with Shanghai’s government will allow the Silicon Valley auto maker to build a wholly owned factory in the city’s free-trade zone, these people said. This arrangement, the first of its kind for a foreign auto maker, could enable Tesla to slash production costs, but it would still likely incur China’s 25% import tariff.”
Tesla has yet to verify the information, however, the automaker has said that more official information should be disclosed before the end of the year.
Hopefully, we will get some more information and perhaps a confirmation on this report in the coming days.