Tesla Inks Deal to Build Factory in Shanghai, China for Alleviating Production Stress

Published Date : Oct 23, 2017

Tesla has been foreseen to be all set for shifting into the second gear with a factory launch in Shanghai. This could give Elon Musk the much needed shanghai to keep pace with his opponents in the fast-growing electric car market. Any deal, however, has been expected to be predisposed to suffer roadblocks. In the China market, the company has secured only a 3.0% share, taking in view all of its hype in the U.S. The US$58.0 billion firm could likely face a competition against GM, Daimler, and Volvo, which has planned to scrape off petrol-only automobiles from 2019.

Tesla may Gain Limited Acceleration despite Advantage of Building Factory

Lately, Musk had spoken about “production hell” on the way to manufacturing half a million automobiles in 2018, or in other words, approximately five times that Tesla could be likely to manage this year. In theory, a factory in China should help the company to release the strain while shortening customer wait times and costs. Nevertheless, the Wall Street Journal reported deal about the manufacturing facility in the country may not be able to solve a core issue. The 25.0% import tax levied on cars manufactured in a factory located within the free trade zone of and wholly owned in Shanghai has been anticipated to hurt the plans of the company.

The only possible way to dodge the levy could be tying a knot with a Chinese partner, which Tesla has been reluctant to due to legitimate concerns over technology transfer. It could be difficult to imagine the competitiveness of its mass-market models in China with the inclusion of the tariff.