Tesla is building a manufacturing plant in Shanghai’s free-trade zone as reported by the Wall Street Journal.
The arrangement would be the “first of its kind for a foreign auto maker,” but will likely not allow Tesla to avoid a 25 percent import tariff, The Verge wrote.
It was in June when Tesla confirmed that it was in talks with the Shanghai government about the company’s plan. While the spokesperson said that even if Tesla aimed to keep most of the production in the US, it did “need to establish local factories to ensure affordability for the markets they serve.”
On the other hand, China will phase out diesel cars in the coming few years and hence, it is encouraging the existing manufacturers to begin building more EVs. And now is the best time for Tesla to build a factory to ramp up its production in China.