Tesla has entered an agreement to build its own factory in Shanghai, a first-of-its-kind deal for a foreign automaker, the Wall Street Journal reported Sunday.

The agreement between the Elon Musk-led carmaker in Palo Alto and the Shanghai government could help bolster China’s fast-growing electric vehicle market, which already leads the rest of the world in EV sales. Details of an announcement about the deal were being finalized.

China’s home-grown manufactures currently produce 43% of total vehicle sales in China but 96% of all-electric vehicles.

The new factory could mean lower production costs for Tesla but not likely eliminate China’s 25% import tax.


Tesla declined Sunday to comment about the report. But it referred to a statement the company made in June, which stated, “Tesla is working with the Shanghai Municipal Government to explore the possibility of establishing a manufacturing facility in the region to serve the Chinese market.”

Reports of the deal come after China has moved to ban new vehicles powered by gasoline and diesel engines. China plans to set a deadline for carmakers to stop selling cars that run exclusively on gasoline or diesel fuel.

China is the world’s largest emitter of greenhouse gases and has been trying to recast itself as a global leader of environmental initiatives.

ivan.penn@latimes.com


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