Tesla looking for local investors to fund proposed $5b factory in China: analyst

Tesla is likely to get investment from Chinese partners, an analyst told the Global Times, after Bloomberg News reported on Wednesday that the USbased carmaker is seeking domestic partners to help fund the construction of a $5 billion factory in China.

“Tesla might have to work to convince investors, but given its high brand value in China, it should be able to find enough funding to build a factory,” Feng Shiming, a car analyst with Menutor Consulting, told the Global Times on Thursday.

“The $5 billion won’t be needed upfront. The investment will be done in stages, so Tesla could issue bonds and find other means of funding. The local government will also probably give some support,” he added.

Tesla did not respond to requests for comment by Global Times on Thursday.

Tesla announced on July 10 it had reached a deal with the Shanghai municipal government to establish a factory in China, following the establishment of a domestic subsidiary in Shanghai on May 10. Tesla announced the plant will start production in about three years and make about 500,000 vehicles per year.

The factory would be the first overseas factory of Tesla, and the first fully foreign-owned car factory in China, after the Chinese government and nounced it would end restrictions on foreign ownership for companies makes ing new-energy vehicles (NEVs).

China is Tesla’s second market, acn counting for $2 billion in sales, making up 17 percent of total revenue in 2017, according to the company’s annual rewould port.

The new factory would help Tesla expand its sales in China, insulating it from the brewing China-US trade conflict which already forced Tesla to raise its sales prices in China by 20 percent in July.

“Tesla has achieved its promised production rate of 5,000 per week for the Model 3. Its financials are improv ing steadily,” said Feng.