Electric carmaker Tesla has reportedly struck a deal with Shanghai to build a new factory in the city. The deal will enable the company to slash its costs to sell vehicles in China, but a 25 percent import tariff will likely still apply.
China requires all automakers to form joint-venture companies with local, Chinese companies to produce vehicles in the country. Tesla is apparently not interested in this according to The Wall Street Journal, preferring to solely own their new Chinese assembly plant. This independent ownership model will mean that Tesla vehicles produced at the Chinese factory will still be subject to a 25 percent import tariff from the Chinese government.
China has suggested in the past it would be willing to waive the local investment requirement on companies aspiring to produce clean, electric vehicles in the country. If approved, Tesla would be the first company to seize on the easing of restrictions in the country.
Details of the deal are still scarce and neither the Shanghai government nor Tesla are speaking publicly on the matter. In recent months Tesla CEO Elon Musk has expressed an interest in establishing a Chinese factory.