Tesla eyes China factory
Tesla is working with Shanghai to explore the possibility of opening a factory in the area, the Palo Alto maker of electric cars confirmed Thursday. Sales in China generate a hefty chunk of Tesla’s revenue, and moving some manufacturing near those buyers would slash some costs.
“While we expect most of our production to remain in the U.S., we do need to establish local factories to ensure affordability for the markets they serve,” a Tesla representative said in a statement.
Tesla has considered producing vehicles in Asia for a while.
Last year, the company pulled in $1.1 billion from sales in China — 15 percent of its worldwide revenue. In the first three months of this year, 19 percent of its revenue was from China.
“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,” CEO Elon Musk said in a conference call with investors last October.
By making vehicles in China, a 25 percent tax on imported Model S and Model X vehicles could be avoided, according to a report from Consumer Edge Research. The report also said that under existing rules, Tesla probably would have to establish a joint venture with a Chinese partner if it wants to build cars there.
Currently, Tesla’s major factories are its robot-powered auto plant in Fremont and its sprawling Gigafactory battery plant in Sparks, Nev.
The company is set to start production of the Model 3, the lowestpriced vehicle in in its lineup, next month.