U.S. Electric Vehicle Manufacturer Tesla Inc has halted land acquisition plans to expand its Shanghai plant and make it a global export hub, say people familiar with the matter, due to the uncertainty created by the U.S.-China dispute.
With tariffs on 25% of China's imported electric vehicles placed above the existing levies under former President Donald Trump still exist, Tesla now aims to reduce the value of Chinese product in its global production, said two to four people.
Tesla had previously considered expanding its Model 3 exports to a wide range of market access, including the United States, sources told Reuters, a program that had never been reported before.
Tesla is currently exporting Chinese Models 3s to Europe, where a factory is being built in Germany.
The Tesla factory in Shanghai is designed to produce up to 500,000 cars a year, and currently produces Model 3 and Model Y cars with 450,000 units a year.
In March, Tesla stopped bidding across the road from the plant as it no longer wanted to significantly increase China's production capacity, at least for now, three people said, refusing to be disclosed as negotiations were private.
In a statement sent to Reuters, Tesla said its Shanghai industry was "progressing as planned".
The Shanghai city government, a key supporter of Tesla's establishment of a fully-fledged factory in China - the first and only private train not required to do joint venture - did not respond to a request for comment.
Tesla had not yet announced its intention to acquire the land, which is about half the size of the 200-acre (80-hectare) site to house Tesla's current location and will enable the company to raise capacity for another 200,000 to 300,000 vehicles, two people said.
Tesla's sales in China are on the rise despite increasing regulatory pressure in the country following consumer disputes over product safety and scrutiny of its data handling.
It generated $ 3 billion in China in the first three months of the year, in addition to three sales a year and accounting for 30% of total revenue.
LAND ACQUISITION PLANS
Led by mercurial CEO Elon Musk, Tesla is known for shifting gears in strategies, including in China.
The construction documents posted on the government website in March show that Tesla is renovating its site in Shanghai to increase capacity.
Tesla still owns land, which was designed for production but is now used for parking, in its Shanghai area. One of the people said that Tesla could increase its capacity by more than 500,000 on its existing site. Another said Tesla could get more land with more car production lines in the future.
Separately, Tesla is building facilities for repairing and refurbishing key components such as electric motors and battery cells and building EV chargers in its Shanghai area.
The Shanghai government has been talking to a number of companies to sell land with the intention of producing new commercial vehicles, said a source familiar with the matter.
Tesla is facing increasing competition in China with local players such as Nio Inc (NIO.N), who are considering making products on the market in bulk under another brand.
Even before the Cold War, few Chinese cars were shipped to the United States.
General Motors Co (GM.N) sells its Buick Envision made in China to the United States, paying an additional 25%, although the SUV is not a high-volume model.
($ 1 = 6.4310 Chinese yuan renminbi)
Posts
