Tesla is About to Build its First Manufacturing Plant in China

Tesla car, China, solar panelsTesla Motors makes steps towards becoming the first foreign car company in China with a manufacturing plant in the Shanghai’s free-trade zone. As the provider of solar panel companies reviews states, the company didn’t want to follow all global carmakers and set up a joint venture with a Chinese partner. They went an alternative way and negotiated a deal with the Shanghai’s government requiring the company to build their own factory in China.

As reported by the two people familiar with the negotiations, a preliminary agreement between Tesla and the city’s local authorities, the company received its property rights on the plant. The Tesla EV production is going to be operated inside a free-trade zone, which means the company has to impose steep tariffs on its products as though they were shipped from other the country. The two persons preferred to stay anonymous because they were not at liberty to reveal the details of this deal.

In spite of these preliminary agreement conditions, there is a chance that future negotiations with the Chinese government can end up with even better terms for the company. The plan is to make a new agreement by the end of 2017.

By the way, China and India were reported to contribute the most to the increase of the PV technology in 2017

Both ways, the profit remains equal for both sides: Tesla Motors gets the world’s largest market for electric cars while China becomes several steps closer to dominating the global electric car industry. The fact that Tesla will manufacture its EVs in the areas of Shanghai will be the second impetus for consumers all across China to purchase electrical cars instead of regular vehicles powered by gasoline. The first reason is the country’s extensive subsidies for electric vehicles that help China not only fight the air pollution issues but also reduce the amount of imported oil.

These are predictions from LMC Automotive, a global consulting firm, suggesting that more than 295,000 battery-electric cars are about to be sold in China by 2017, which is 8 thousand more from the total amount (287,000) of cars sold in the rest of the world.

Currently, China has strict rules regarding the auto trade with all the largest car companies requiring to pay huge steep tariffs (25 percent) on imported vehicles. In comparison, the European Union charges 9.8% and the U.S. tariff only 2.9%. Due to such unbelievably high tariffs on imported cars, foreign manufacturers find their products tough to compete with the ones produced directly in China. The country is interested in growing their own auto industry and making it more competitive.

As a matter of fact, the high price for automobiles isn’t caused by high shipping costs (this one makes up only 1-3 percent of the total cost of a car). The price depends directly on whether there is a 25% tariff or not.

The US president Donald Trump already plans to visit Beijing on the 8-10 November, however, there is a little chance China and the US can come to some important negotiations in the EV industry. If Tesla is allowed to operate its plant outside a free-trade zone, it will be a real breakthrough for a foreign car manufacturer since the times such a permission became available for Honda.

Also, read about solar panels that look more like a glass roofing!