HONG KONG -- Tesla Motors is in discussions to establish a factory in Shanghai, its first in China, a move that could bolster its efforts in one of its major markets even as it further lifts China's position as a builder of electric cars.
In a statement Thursday, Tesla said it needed to set up more overseas factories to make cars that customers could afford. Such a strategy is a must in China, which charges steep tariffs for imported cars.
"To better serve the Chinese market, Tesla is in the process of discussing about the possibility of setting up factory locally with the Shanghai government," a spokesman, Duan Zhengzheng, said in a statement. "Per our previous negotiations, by the end of this year, we will have a much clearer plan for our localization."
"Tesla has always been devoted to cultivating the Chinese market," she said.
China accounted for about 15 percent of Tesla's revenue last year, nearly double the percentage it contributed in 2015.
Shanghai city officials did not respond to requests for comment. Bloomberg News reported earlier that Tesla and Shanghai had signed a preliminary agreement.
Tesla's negotiations do not guarantee that a plant will be built. Under Chinese law, such a project would require Tesla to find a Chinese joint-venture partner. While China is full of Chevrolets, Fords and Volkswagens, most are made in factories jointly owned by a foreign automaker and a local company.
Shanghai controls SAIC Motor Corp., one of China's largest automakers and a partner for General Motors and Volkswagen. It was not clear whether Tesla's negotiations with the city government would steer the company to negotiate with SAIC. Calls to the Chinese automaker were not returned.
A Chinese Tesla factory could represent a big symbolic victory for Beijing. Spurred by incessant pollution and increasing dependence on foreign oil, China for the past several years has pushed to be a leader in electric-car development.
That has raised concern in Western countries. In March, the European Union Chamber of Commerce in China complained that Chinese law requires manufacturers who set up shop in China to transfer crucial technology to their Chinese partners.
The complaint coincides with a broader debate over China's plan -- called Made in China 2025 -- to become self-sufficient in some technology industries. That plan has led to concerns that China will nurture and subsidize domestic competitors to Western companies.
It is not clear what arrangements Tesla would make in China. The battery is central to any electric-car technology. Tesla has invested heavily in its $5 billion Nevada factory, called the Gigafactory, to produce batteries.
Tesla models carry a hefty price in China. The Model S ranges from 723,500 to 1,399,800 renminbi, or about $104,000 to $203,000.
Business on 06/23/2017