Tesla close to agreement on building vehicles in China

Tesla is close to an agreement to open its first manufacturing facility for producing vehicles in China for the first time, according to Bloomberg.

The agreement reportedly being worked out with municipal authorities in Shanghai will enable Tesla to build a factory in Lingang Development Zone. Under Chinese regulations, Tesla needs to cooperate with at least one local partner to set up a joint venture.

Elon Musk, CEO Tesla, Inc., said that setting up a factory is a crucial step for gaining access to the Chinese market. Tesla's revenues in the Chinese market doubled in 2016, reaching over US$1bn.

Locally produced vehicles can avoid the 25 percent import tax which currently makes Tesla's Model S sedans and Model X sport utility vehicles much more expensive in China than in the US.

Chinese authorities have made new-energy vehicles a priority, classifying them as a strategic emerging industry, with hopes of increasing sales of hybrid vehicles and fully electric cars 10-fold in the next decade.

China surpassed the United States to become the largest non-emission auto market in 2015.

Chinese internet firm Tencent Group bought a 5 percent stake in Tesla for US$1.8bn in March, 2017.

(GBTIMES)