Tesla is interested in opening a factory in China to begin building its all-electric vehicles in the country, the company revealed this week. But before fans of American manufacturing start getting worried, know that this isn’t about Tesla looking for a cheaper workforce or anything like that. Instead the car maker is looking to improve its appeal among buyers by making the vehicles more affordable for the local market.
See, China imposes a 25% tariff on all imported cars, meaning a new Model S is much more expensive in the country than it would be for a Tesla customer in the US. This means the company has a hard time attracting buyers in the country and expanding its local business, and even when it does they have to eat the costs for shipping.
To get around this roadblock, Tesla has announced it’s holding discussions with the municipal government in the city of Shanghai about opening a manufacturing facility there. These talks are still in the early stages, mind you, and there’s no timeline given for when a plant may be completed, but the car company says it expects to “more clearly define” its plans for China by the end of the year.
The other issue Tesla faces is that of finding a partner. Chinese laws also require that new car manufacturers enter into a venture with a local company, with the foreign company — Tesla, in this case — having no more than 50% ownership. There’s no indication of who Tesla might be interested in partnering with, but we’ll likely hear more in the future as the car maker get more serious about the Chinese market.