Tesla looks to start manufacturing cars in China
Tesla Motors announced that it was in talks with the Chinese authorities to establish a factory in Shanghai, a first in China. Touted as an important move in China, the strategy is significant in a country which charges high tariffs for imported cars. Establishing local factories would help the company ensure that its vehicles remain affordable for the local markets.
Tesla's tryst with China
China, the world's second biggest economy has been in the limelight for its rising problems with air pollution; the government is exploring ways to help adopt electric cars. In 2014, American auto giant Tesla promised to deliver on this goal by establishing a local manufacturing unit in China. Till date, Tesla only used to export its vehicles to China, purchased mostly by the affluent.
Tesla's growth in China
According to the China Association of Automobile Manufacturers, over 507,000 electric vehicles were sold in China last year. Nearly 15% of the company's $7 billion revenue were garnered in China, according to Bloomberg.
China: Elon Musk's Asian production hub?
"It's pretty obvious that long-term you want to have your production close to your consumption, so you don't have massive logistics costs, transporting cars halfway around the world," Chief Executive Elon Musk had told investors last October.
Hurdles looming ahead for the deal?
The discussions do not promise a plant being built, since the company will have to adhere to a list of Chinese laws. The regulations require the company to find a Chinese joint-venture partner to execute the project. The government also announced that it would no longer issue licenses to automobile companies, thereby forcing Tesla to partner with a company that already has one.
