Tesla in talks to build EVs in China, may partner with internet giant

Tesla is in talks to build its Model 3 in China for sale in China. Company photo.

Tesla hoping to avoid 25 per cent import tariff

Tesla Inc is moving closer to establishing a manufacturing plant for its electric vehicles in China. The Palo Alto California-based company said on Thursday that it is in exploratory talks with the municipal government of Shanghai.

According to Reuters, the company did not give a definite timeline for setting up the plant in China, but said it expects to “more clearly define” its production plans for China by the end of the year.

Tesla shares were up in trading by 1.5 per cent to $382 in midday trading.

Tesla has said in the past that it wants to build its EVs in China to avoid a 25 per cent tariff on imported vehicles. China’s central government requires foreign companies to have a Chinese partner in new auto manufacturing ventures. The foreign company can own no more than 50 per cent of the business.

While Elon Musk’s company did not specify which companies it might partner with, there has been speculation that Tesla may enter into an agreement with Tencent Holdings, China’s largest company.

Earlier in 2017, Tencent bought a five-percent stake in Tesla for $1.8 billion.

Which model Tesla plans to build in China is also in question, but some believe the company is looking at building the Model 3 sedan and a crossover companion called the Model Y.

The Model 3 is expected to begin production in July at the company’s Fremont plant and the Model Y is tentatively scheduled to be built in mid-2019.

Earlier this week, Ford announced it was moving its production of the Ford Focus to China. Following the announcement, Robert Lighthizer said he was concerned about Ford Motor Co’s move to build the small cars in China and import them into the United States.

“If it happened for reasons that are non-economic reasons, then I think the administration should take action,” Lighthizer told U.S. lawmakers.