City of Shanghai agreed to allow Tesla to build facilities in its Lingang development zone
Tesla Inc. American automaker and solar panel manufacturer is prepared to sign its first ever agreement for vehicles production in China.
Bloomberg broke the story about some early details on the agreement. Tesla arrival in China will give electric-car maker better access to the world’s largest auto market.
According to the Bloomberg report, the city of Shanghai agreed to allow Tesla to build facilities in its Lingang development zone and could come as soon as this week.
However, Tesla would need to set up a joint venture with at least one local partner under existing rules and it isn’t immediately clear who that would be.
On second hand, representatives for Tesla at the company’s headquarters in Palo Alto, California, didn’t immediately respond to requests for comment. A spokesman for Lingang didn’t answer calls to his mobile phone.
Tesla’s Chinese revenue tripled to over $1 billion last year, but imported vehicles carry stiff tariffs, thus limiting the market for the highly subsidized electric vehicles. Cars produced in China itself wouldn’t carry the customary 25% import tariff.
China’s Tencent Holdings purchased a 5% stake in Tesla back in March that many surmised could lead to this sort of deal.
In March, Tencent Holdings Ltd., China’s biggest internet company, bought a 5 percent stake in Tesla for $1.8 billion. Teaming up with the owner of the WeChat and QQ messaging services could help the automaker gain traction in a market where more than 200 companies have announced plans to build new-energy vehicles.
Tesla, which made roughly 80,000 cars in 2016, aims to boost it by about 7-fold to 500,000 annually by 2018. The automaker also plans to finalize locations of up to three battery Gigafactories this year.
Tesla Inc shares rose $4.90 (+1.33%) to $374.70 in after-hours trading Monday. Year-to-date, TSLA has gained 73.05%, versus a 9.93% rise in the benchmark S&P 500 index during the same period.
TESLA currently has a StockNews.com POWR Rating of A (Strong Buy), and is ranked #1 of 24 stocks in the Auto & Vehicle Manufacturers category.