Tesla in China

Rumors that Tesla is looking to establish a firmer foothold in China by building a factory in the region have been circulating all week. First, China Daily shared the news, then both Bloomberg and Reuters picked it up. Now, the world has confirmation straight from Tesla that the electric vehicle (EV) manufacturer is indeed in talks with local government in China.

Tesla sent Electrek a statement on the potential Chinese Gigafactory:

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. As we have said before, we expect to more clearly define our plans for production in China by the end of the year. Tesla is deeply committed to the Chinese market, and we continue to evaluate potential manufacturing sites around the globe to serve the local markets.

While details of a deal haven’t been confirmed, anonymous sources told both China Daily and Bloomberg that one would be signed yesterday.

China’s Commitment to Clean Energy

It’s no secret that Tesla has been searching for locations to build more of its Gigafactories, and China does seem like a very obvious choice. Tesla sales increased by 181.7 percent from 2015 to 2016 according to LMC Automotive Consulting Shanghai, with the company selling 10,399 cars in the country last year, tripling its sales to more than a billion U.S. dollars in revenue.

By manufacturing cars for local distribution in China, Tesla could avoid the 25 percent import tariffs it currently pays, but the company stressed in its statement that it would continue manufacturing the bulk of its cars in the United States: “While we expect most of our production to remain in the U.S., we do need to establish local factories to ensure affordability for the markets they serve.”

The decision to allow a Gigafactory to be built in China would affirm the nation’s commitment to eliminating pollution. Currently, renewable energy sources are booming in the Asian country — it’s now the world’s biggest solar energy producer. It’s also doubling up efforts to promote electric vehicle use in several key cities, and having locally produced Teslas would definitely give China more muscle in its fight against climate change.