Tesla Reaches Deal To Build Factory In China

Earlier this year, the automaker confirmed plans that it was looking to build a factory in Shanghai.

(AP Photo/Christophe Ena, File)
(AP Photo/Christophe Ena, File)

According to a report from the Wall Street Journal, Tesla has reached an agreement with Chinese officials to build a manufacturing plant in Shanghai. 

This deal could enable the electric automaker to gain more footing in China's booming electric vehicle market and, perhaps most importantly, slash production costs. However, it is likely that Tesla would still incur the country's 25 percent import tariff. 

Back in June, Tesla confirmed speculation that it had begun looking to construct a factory in the region. 

Tesla's arrangement with China is also notable because, according to reports, the automaker would own the factory in Shanghai. Typically, companies are forced to collaborate with local manufacturers to align with strict rules.

China is widely considered the world's largest market for automobiles, and the county has recently made a major push to encourage the development of a more robust electric vehicle market.

Notably, China is also working to dramatically cut carbon emissions, including a plan to phase out the production and sale of fossil fuel vehicles. 

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