Tesla to open factory in China, expects to manufacture 500,000 cars annually

Tesla CEO Elon Musk has struck a deal with Shanghai officials to open the carmaker's first plant in China. It comes after Tesla hiked its car prices in China amid mounting trade tensions between Washington and Beijing.

American electric-car maker Tesla said on Tuesday it expects to be manufacturing some 500,000 a year in China in the coming years, after it signed an agreement with Chinese authorities to open a new car plant in Shanghai.

Chinese news website Knews, an affiliate of the state-owned Shanghai Media Group, reported that the new Tesla plant would integrate research and development, manufacturing and sales functions. The deal marks Tesla's largest overseas venture yet and would double the size of the carmaker's global manufacturing — although meeting stated unit production targets has been something of a sore spot of late for the company.

According to Shanghai officials, the agreement was signed on Tuesday at the Fairmont Peace Hotel, although media attendance was limited. A Reuters witness reported that Tesla CEO Elon Musk attended the signing, while Bloomberg reported that Musk was slated to visit Beijing later this week.

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Business | 17.11.2017

Musk presents Tesla's big rig

Tesla said it planned to produce its first cars within two years after construction of its Shanghai plant begins, and that it intends to ramp up production to 500,000 cars annually within two to three years after that.

Following the announcement, Tesla shares rose 1.5 percent in early US trading.

Tesla undeterred by US-China trade dispute

Tesla's foray into the Chinese market was announced just as the automaker raised prices on US-made vehicles sold in China in a bid to offset tariffs imposed by Beijing in retaliation over US President Donald Trump's decision to slap heavy duties on Chinese goods.

The latest hikes have seen prices in China rise to more than 70 percent higher than in the US.

However, Tesla insisted that the Chinese-US trade row had no bearing on the new agreement. Musk has long entertained the possibly of opening a Chinese manufacturing plant but decried Beijing's tough rules for foreign automakers, which would have seen Tesla forced to cede a 50-percent share in the factory to a local partner.

However, Beijing announced in April that it would halt restrictive ownership rules for foreign electric carmakers by 2020. The new agreement will allow Tesla maintain control of the plant and protect its technology.

Even before China's 25 percent levy on US vehicles, carmakers have for decades moved to build more cars in China to mitigate currency fluctuations and trade policy reversals. As the world's largest electric car market, investment by automakers into China has risen significantly in recent years.

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According to the China Association Of Automobile Manufacturers (CAAM), some 777,000 new energy vehicles were sold in China in 2017, with the number expected to hit 1 million this year, accounting for roughly 55 percent of all global sales.

Beijing has said it is working towards a goal of 100 percent electric vehicles on the road by 2030.

No German cars among top-selling all-electric vehicles

Crossover SUV in 5th place

Tesla sold 33,000 units of its Model X in 2017, according to data from UK-based market researcher JATO Dynamics. That puts the mid-sized luxury car with falcon wing doors in 5th position in the list of last year's best-selling fully electric cars.

No German cars among top-selling all-electric vehicles

Tiny and a bit whimsical, but ...

...successful nonetheless was the Zotye Zhidou (ZD) from China. Some 42,000 units of the model were shipped last year, with the tiny vehicles becoming increasingly popular in the Asian nation where affordablility can be a universal selling point.

No German cars among top-selling all-electric vehicles

Turning over a new leaf

Japanese carmaker Nissan introduced its Nissan Leaf back in 2010, banking on e-mobility at an early stage. The five-door hatchback proved the third most sold all-electric vehicle in 2017 (46,000 units). Leaf batteries can be charged to 80-percent capacity in 30 minutes.

No German cars among top-selling all-electric vehicles

Where acceleration matters

Tesla Model S cars are able to pick up speed very rapidly thanks to their all-electric powertrain technology. The vehicle features autopilot capabilities, making driving safer and less stressful. Some 47,000 people bought the Model S last year — only one model reached even more buyers.

No German cars among top-selling all-electric vehicles

And the winner is ...

...China's BAIC EC. The compact electric city vehicle has fared well especially in its home market due to its trendy design and an improved range of 200 kilometers (125 miles) per charge. A record 78,000 units left the showrooms in 2017.

dm/msh (Reuters, dpa)