Tesla’s proposed Chinese factory would crank out 500,000 cars a year

That didn't take long: Days after Tesla raised prices to offset import tariffs in China, the company has announced it has reached an agreement with the government in Shanghai to produce vehicles in the region. According to Bloomberg, it'll rival production of Tesla's sole factory in the US, with capacity to build 500,000 cars per year. It apparently won't be the only plant revealed in 2018, as the company tease d that details for a European production facility would be discussed later this year.

Over the weekend, Tesla raised prices on the Model S and Model X by over $20,000 (depending on configuration) as a result of the ongoing trade war between the US and China. While there previously was a 25 percent import tax, it didn't stop the region from buying Tesla's cars. Last year the automaker sold 14,779 vehicles in the country, and the country represented almost 20 percent of Tesla's revenue. Then China raised the import duties for American-made vehicles by an additional 15 percent as a response to President Trump's trade war.

It isn't entirely clear what Tesla will build at the factory, but Musk has previously hinted that it'd likely be a site for Model 3 and Model Y (the company's crossover vehicle). Those cars still need batteries, though, and Tesla's lone battery factory is in Nevada.

Musk has been talking about building a plant in China long before Trump added 25 percent import duties to over 1,300 Chinese products including steel, iron and touchscreens. The move will cut down on shipping fees, for starters, but it will also help Musk reach the production numbers and profitability he's been chasing for years.

Harley Davidson recently did something similar. As a means of sidestepping the trade war Trump started with Europe by adding tariffs to imported aluminum and steel, the company announced that it'd shift production of motorcycles destined for European customers to the continent.

Now to see how fast Tesla can build in China and if the factory will be up and running before this trade war ends.

Source: Bloomberg



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