Tesla moves to speed up production in Shanghai

US-based electric car produce Tesla Inc is moving swiftly to accelerate its production in China, as the company tries to reduce the negative impact on its sales in the Chinese market from tariffs amid a trade war between China and the US.

Tesla said that it would move portions of the Model 3 production to China in 2019 and fast-track other localization plans in a bid to reduce prices that have been significantly boosted by tariffs, the company said on Wednesday.

“In order to significantly increase the affordability of the Model 3, we have decided to accelerate our manufacturing timeline in China,” the US company said in a statement, adding that demand in China remains “challenging” due to a 40 percent import duty for imported models.

Although China has reduced tariffs on all imported cars to 15 percent, tariffs on cars imported from the US have increased to 40 percent, according to Tesla.

The increased tariffs on US-made cars resulted from tariffs China imposed on US products in countering US tariffs on Chinese goods.

Tesla plans to produce the Model 3 and Model Y cars in its first overseas Gigafactory in Shanghai, which could have an annual capacity of 250,000 at the initial stage, according to an environmental report on the project in China released on Wednesday.

A screenshot of the report was posted by the news website jiemian.com.

Tesla reported “historic” third-quarter profit, boosted by demand for its first mass market Model 3. Net income reached $312 million, compared with a loss of $619.4 million during the same period last year, according to the company.