Tesla hopes to produce 500,000 cars per year at new Shanghai plant

Tesla hopes to produce 500,000 cars per year at new Shanghai plant

Tesla hopes to produce 500,000 cars per year at new Shanghai plant

Tesla said Tuesday's announcement will not impact USA manufacturing operations, which continue to grow. -Chinese tension over technology and joint ventures, and follows Beijing's April promise to end restrictions that required foreign automakers to work through local partners.

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.

"We are glad to have a strategic partnership with Tesla, and we welcome the development, manufacture and sale of pure electric vehicles in Shanghai", Mayor Ying Yong said in a translated news release provided by Tesla.

Chief Executive Officer Elon Musk sealed a crucial agreement Tuesday to start building its second auto assembly plant in the world.

In April this year, however, China said it would be removing the 50-percent foreign ownership cap for electric vehicle (EV) and plug-in hybrid auto manufacturers as early as this year, in a move that would benefit Tesla enormously, which doesn't have local manufacturing and imports all the vehicles it sells on the Chinese market-the world's biggest EV market. Despite that, China quickly became its No. 2 market after the United States. Tesla builds its electric sedans and SUVs at its factory in Fremont, Calif. and ships them to China, which subjects the vehicles to an import tariff. Tesla probably will make the smaller Model 3 sedan and upcoming Model Y crossover in China, he said then, rather than the pricier Model S sedan or Model X sport utility vehicles, which often sell for more than $100,000 in the U.S.

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Other foreign automakers that could announce price increases in China include German automakers BMW and Daimler AG.

Tesla is the first major USA automaker to raise prices in China in response to the higher tariffs.

China is the world's biggest electric vehicle market, and automakers are pouring billions of dollars into developing models for it. Sales of pure-electric passenger vehicles in China rose 82 percent past year to 468,000, according to an industry group, the China Association of Automobile Manufacturers. That would be more than double the current US market, where new light vehicle sales run at about 17 million vehicles a year. That gave it about 3 per cent of the nation's battery-powered electric-vehicle market, placing it as the No. 10 brand in that segment. Later, they face pressure to raise those sales in order to satisfy fuel efficiency requirements that increase annually.

Tesla said it also would set up a research and development facility in Shanghai.

In a statement from the Shanghai Municipal People's Government that was translated into English and which Tesla provided to this news organization, Musk said the Shanghai operation "will be a state-of-the-art vehicle factory and a role model for sustainability".

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