Photo: Tesla Inc
After the booming years during which the rest of the world was just coming out of the 2008 financial crisis, China's car market growth seems to have toned down a little.
Toned down it might have, but that doesn't mean it's not still the juiciest out there, and that's particularly true for EVs, as the Chinese government is trying to curb the awful levels of air pollution by encouraging people to buy battery-powered cars.
Tesla has had a pretty strong presence on the market already, but its sales have been hampered by the fact that any foreign carmaker that wants to trade its products on the Chinese market is hit by a 25 percent import tax. That means a Tesla is considerably more expensive in China than it is in the U.S.
There is a way around this tax, and other manufacturers have been using it for years. If the company can secure a deal with a local enterprise and build (or at least assembly) the vehicles locally, then they would be exempt from the extra charge.
With the Model 3 in the pipeline, such a deal is becoming even more relevant for Tesla, since the upcoming EV hopes to persuade the less wealthy as well, the people who wouldn't pay the 25 percent premium without blinking.
It seems a deal is about to go through, even though nothing official has been communicated yet from either side. Sources who asked to remain anonymous told Bloomberg that Tesla Inc. is about to sign an agreement with the city of Shanghai that will allow the American EV maker to set up production facilities in the Lingang development zone.
Tesla would still have to form a joint venture with a local company, but no names have been put forward at this point. The sources claim the announcement could come by the end of the week, but nothing is set in stone yet.
With almost three times as many EVs sold in China compared to the U.S. in 2016, it's clear that this move would be immensely beneficial for Tesla. It's true that a similar comparison based on the value of the vehicles would look completely different, but considering the much lower entry price of the Model 3 and with the 25 percent tax gone, China would definitely prove to be a lucrative market for Tesla in the future.
Tesla has had a pretty strong presence on the market already, but its sales have been hampered by the fact that any foreign carmaker that wants to trade its products on the Chinese market is hit by a 25 percent import tax. That means a Tesla is considerably more expensive in China than it is in the U.S.
There is a way around this tax, and other manufacturers have been using it for years. If the company can secure a deal with a local enterprise and build (or at least assembly) the vehicles locally, then they would be exempt from the extra charge.
With the Model 3 in the pipeline, such a deal is becoming even more relevant for Tesla, since the upcoming EV hopes to persuade the less wealthy as well, the people who wouldn't pay the 25 percent premium without blinking.
It seems a deal is about to go through, even though nothing official has been communicated yet from either side. Sources who asked to remain anonymous told Bloomberg that Tesla Inc. is about to sign an agreement with the city of Shanghai that will allow the American EV maker to set up production facilities in the Lingang development zone.
Tesla would still have to form a joint venture with a local company, but no names have been put forward at this point. The sources claim the announcement could come by the end of the week, but nothing is set in stone yet.
With almost three times as many EVs sold in China compared to the U.S. in 2016, it's clear that this move would be immensely beneficial for Tesla. It's true that a similar comparison based on the value of the vehicles would look completely different, but considering the much lower entry price of the Model 3 and with the 25 percent tax gone, China would definitely prove to be a lucrative market for Tesla in the future.
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