Tesla goes big in China with Shanghai plant

A row of new Tesla Model 3 electric vehicles is seen at a parking lot in Richmond California

The move by the electric auto maker follows China's decision to slap new tariffs on American vehicles in retaliation forUS measures against $34 billion of Chinese exports.

The price increase was a direct response to China's new 25 percent tariff on certain American goods, including cars.

As the trade war between the USA and China (as well as the rest of the world) escalates, Tesla announced Tuesday an agreement with Chinese officials to build a new factory in Shanghai, reports Reuters.

Tesla announced previous year it was talking to the Shanghai city government about possibly building a factory. China has long pushed to capture more of the talent and capital invested by global automakers in advanced electric vehicle technology.

Tesla Chef Executive Elon Musk signed the agreement at an event in Shanghai, which will be home to the plant. The company's Model 3 unit seemed destined for what Musk called a "production hell", with the company having several product line suspensions in order to reevaluate manufacturing practices in the Fremont facility.

Tesla did not immediately respond to requests for comment.

Tesla shares rose 1.5 percent in early US trading, even as some analysts questioned where the money-losing company will get the capital required to build and staff such a large plant. Just recently, however, reports have emerged that Tesla had started offering test drives for the Model 3.

Construction will begin soon, after securing needed permits, and it will produce 500,000 electric vehicles a year for Chinese consumers in two to three years, the company said in a statement. Shanghai officials describe it as the largest foreign-funded manufacturing project in Shanghai history.

Musk has also said the company will reveal plans near the end of 2018 to build a factory in Europe.

Global automaker Daimler (DDAIF) warned last month that the new Chinese tariffs would hit its profits, resulting in "fewer than expected SUV sales and higher than expected costs", which won't be completely passed on to customers.

At the top of the range, the most expensive Model X crossover is now 1.57 million yuan ($240,000) up from about 1.32 million ($200,000) before.

In the meantime, Tesla has reportedly hiked its prices for imported vehicles in China to offset costs of increasing tariffs.

Tesla is particularly exposed to escalating trade tensions between China and the USA because the company doesn't have a factory in China, unlike other automakers such as BMW, Ford Motor and GM.

Other automakers long ago capitulated to China's strict foreign ownership requirements for auto factories, requiring United States companies to establish 50:50 joint ventures with local firms to build cars in the world's largest auto market.

China has emerged in recent years as the world's largest market for electric vehicles.

Related News:

  • 4 more boys brought out of flooded Thai cave

    4 more boys brought out of flooded Thai cave

    The new stage started around 11 a.m. local time (midnight ET), and operations halted at night, a source confirmed to CBS News. Thirteen foreign divers and five members of Thailand's navy SEAL unit are taking part in the rescue operation.
    Defeat is saddest moment of my career-Neymar

    Defeat is saddest moment of my career-Neymar

    And I think that's a role that allows us to be a team. "[But] I think offensively that we are really strong". You are a Brazilian journalist? Information from Reuters was used in this report.
    Michael Cohen Suggests He Could Cooperate With Mueller Probe

    Michael Cohen Suggests He Could Cooperate With Mueller Probe

    Cohen said he had provided documents to the special counsel's office but had not been interviewed by Mueller's team, ABC said. The Trump lawyer says that Avenatti is "pulling the First Amendment out of his tiny bag of tricks".
  • Pompeo shrugs off North Korea's 'gangster' rebuke

    Pompeo shrugs off North Korea's 'gangster' rebuke

    Even so, the United States envoy yesterday insisted again that he thought the talks were "in good faith and productive". I expect that the DPRK is ready to do the same, ' Pompeo said, using the initials for North Korea's official name.
    USA  added 213,000 jobs in June; unemployment rose to 4 pct

    USA added 213,000 jobs in June; unemployment rose to 4 pct

    Although wages grew 2.7% in June from a year ago, they didn't change much from May and came in below economists' expectations. In June, the United States unemployment rate unexpectedly rose to 4% from 3.8% the month before, coming off an 18-year low.
    Former UCLA basketball player reportedly dead after police standoff

    Former UCLA basketball player reportedly dead after police standoff

    He declared for the National Basketball Association after his sophomore campaign, getting drafted by the NBA's Sacramento Kings . Although officers could not communicate with the man after the shooting, they believe the man is still alive, the report said.
  • Let them hang: Supreme Court on Delhi rapists

    Let them hang: Supreme Court on Delhi rapists

    The Court had reserved its judgement in the matter on May 4 this year after hearing the arguments on behalf of the convicts. However, the Centre amended the rape law to introduce the death penalty as the maximum punishment in gang rape cases.
    Surprise package Russian Federation  do Cherchesov proud in World Cup defeat

    Surprise package Russian Federation do Cherchesov proud in World Cup defeat

    In the second half, the teams they failed to score and the match went into overtime, where the spectators saw two more goals . Croatia is now also the first team to enter the last four stage of a World Cup after surviving two penalty shootouts.
    Russian Federation  summit is a good move

    Russian Federation summit is a good move

    Some diplomats fear that Trump will threaten to pull troops out of Europe without more spending on defense, despite US denials. But Hutchinson, and the US ambassador to Russia Jon Huntsman, gave upbeat assessments of the upcoming meetings.
  • Starbucks ditching plastic straws out of environmental concerns

    Starbucks ditching plastic straws out of environmental concerns

    The brewer is phasing out plastic, one-time-use straws, because of material waste and danger to aquatic sea life they can cause. Starbucks introduced a new line of iced tea, coffee and tea lemonade drinks to their customers to cool down in the summer.
    Fourth summer signing imminent, BBC reporter confirms transfer move

    Fourth summer signing imminent, BBC reporter confirms transfer move

    He's the man who every Arsenal fan waits to hear from when it comes to transfers and he has finally spoken about Lucas Torreira. According to BBC news, Lucas Torreira is all prepared to become Arsenal's fourth player signed in this summer transfer window.
    Thibaut Courtois responds to claims he mocked Jordan Pickford

    Thibaut Courtois responds to claims he mocked Jordan Pickford

    "So, it's a huge moment for these players, but also the generations to come as well". What Pickford lacks in height, he makes up for in spring and speed around his goal.


Most liked

Noida now has the largest mobile factory in the world
Xiaomi is also building up its presence in India, where its cheaper devices have appealed to price-conscious consumers. Samsung has set-up this factory to tap into the lucrative and fast growing smartphone market in India.

Did Trump ever want to sit down with Mueller?
And - here's a fun thought for POTUS - Michael Cohen might have access to the detonator. Trump's Supreme Court nominee should be involved with the Mueller investigation and Mr.

Croatia sacks Vukojevic over Ukraine message
Federation Internationale de Football Association later announced a $15,000 fine against Vukojevic, and a warning against Vida. Besides firing Vida, it also issued an apology for the video.

Trump's SCOTUS nominee could make or break the Missouri Senate race
Wade , the landmark Supreme Court decision that is viewed as a top target by many conservative judicial activists. Senate Democrats are calling for the nominee's confirmation hearing to be postponed after the November elections.