Tesla preparing to build factory in Shanghai?

Chinese Tesla Gigafactory Shanghai

Chinese Tesla Gigafactory Shanghai

"Tesla's new company in Shanghai is a clear message that it will definitely land in the Chinese market for local production", said Davis Zhang, a senior executive at Suzhou Hazardtex, a fork-lift manufacturer.

AFP reported that Tesla has set up a company in Shanghai focusing on technology development in China, a crucial market for the U.S. firm as the country plans to scrap ownership limits for foreign automakers. Tesla's head of China, Zhu Xiaotong will be the new company's legal representative and Tesla's Hong Kong branch, Tesla Motors HK Ltd.as the only shareholder.

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Tesla, the biggest-selling electric carmaker in the USA, would not comment on its Chinese subsidiary on Monday.

The new Tesla will focus on manufacturing electric vehicles, batteries, energy storage equipment, photovoltaic products as well as spare parts.

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USA media reports have speculated the Shanghai registration is a response to China's willingness to ease its foreign ownership restrictions for automotive factories.

Tesla now imports all the cars it sells in China from the United States. The foreign ownership rule change in China marks a major policy shift by the country which had capped foreign ownership at 50% for the last two decades. It has other wholly-owned firms registered in China focused on sales and research and development. The formation of this company comes shortly after Elon Musk said Tesla was edging closer to an announcement regarding a Chinese factory.

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The U.S. carmaker has been in protracted negotiations to set up its own plant in Shanghai to produce vehicles locally, helping bolster its position in the country's fast-growing market for electric cars and to avoid high import tariffs. Now, Tesla has announced that it would unveil the location of its own Gigafactory in China.

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