Tesla announced on Tuesday that it has reached a deal with Chinese authorities to build a factory in Shanghai, a move that would help the US electric-car maker double its global manufacturing.
The new plant, which will be Tesla’s first production facility outside the United States, would be capable of churning out about half a million vehicles a year once it goes full scale, Reuters reports.
The plan was announced as Tesla boss Elon Musk made a trip to Shanghai and met up with local government officials, including the city’s mayor.
The US firm plans to produce the first cars about two years after construction begins on its Shanghai factory, ramping up to as many as 500,000 vehicles a year about two to three years later.
That would make Tesla’s Shanghai plant large by auto industry standards, and roughly equivalent to the planned annual production at Tesla’s plant in Fremont, California, Reuters noted.
The Shanghai government suggested it could help with some of the capital costs.
“The Shanghai municipal government will fully support the construction of the Tesla factory,” the local administration said in a statement.
It said it welcomes Tesla’s move to invest not only in a new factory in Shanghai, but in research and development as well.
Tesla said Tuesday’s announcement will not impact US manufacturing operations, which continue to grow.
The automaker, meanwhile, has raised prices on US-made vehicles it sells in China to offset the cost of new tariffs imposed by the Chinese government in retaliation for US President Donald Trump’s heavier duties on Chinese goods, the report said.
Tesla hiked prices in China over the weekend to a level more than 70 percent higher than in the United States, according to the report.
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