Tesla Plans To Build China Plant That Can Produce 500,000 Vehicles Per Year

Reportedly, Tesla has been able to reach a preliminary deal with the government of China to have the next gigafactory of the company built in Shanghai. The said plant can make 500,000 cars per year.

The government of China confirmed the said deal in a statement that was released this morning. It comes after reports that were surrounding the visit of Elon Musks, the chief executive of Tesla, to the city were released earlier today. Bloomberg added that he is scheduled to follow up with another set of visits to Beijing tomorrow and on the following day.

Currently, the companyships more than 15,000 cars per year to China. Yesterday, it raised the price tags of its Model X and Model S cars by up to $37,600 (£28,226) because of the new 40 percent tariff on the importation of cars that are made in the United States of America.

The share price of Tesla was up by 2.24 percent as the markets opened in New York.

The firm revealed its plans to build its first foreign factory that will be located in Shanghai during its annual shareholder meeting that was held at the beginning of June. It comes as an apparent bid to avoid the said tariffs on import.

At that time, Musk said that the new so-called dreadnought factories of the company would be able to produce both batteries and assemble the vehicles in one place.

In the United States, Tesla is operating one gigafactory that is located in Nevada where it makes batteries for both its home energy products and cars, and another factory that is located in California where it assembles the vehicles.

The news that the factory that will be established in Shanghai will support the creation of 500,000 cars per year is considered to be staggering as compared to the current production numbers of the company of around 88,000 cars so far this year.

According to regulatory filing, China accounts for approximately 17 percent of the annual revenue of Tesla.