After months of speculation, it’s now official. According to the Wall Street Journal (subscription required), Tesla will build its first factory outside the US in the free trade zone outside Shanghai, China. Perhaps it would be more accurate to say the factory will be Tesla’s first factory in China. If the market for electric cars continues to soar, as Chinese officials hope it will, there could be other Tesla factories in China in the future.
The news was widely anticipated. What was not known until now is that Tesla will be the sole owner of the factory. Until now, China has required all foreign manufacturers to partner with a Chinese company before building a factory within the country. Tesla will be the first to take advantage of the new policy.
But — there’s always a “but”, isn’t there? — not having a local partner means the cars produced in China will still be subject to the same 25% tariff that applies to all cars imported into China. Tesla apparently feels that not sharing its technology with a local company is worth more than avoiding the 25% fee would be. The question now is whether other manufacturers will follow Tesla’s lead and build factories in China without a local partner.
Tesla has declined multiple requests from the global media to comment on the Wall Street Journal story, leaving us to ponder its last official statement on the matter from back in June:
“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’ve 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 we expect most of our production to remain in the US, we do need to establish local factories to ensure affordability for the markets they serve.”
Tesla watchers expect Tesla will announce that it will build a factory in Europe shortly, as it advances its plan to rule the automobile marketplace in coming years.