Tesla Strikes Deal With Shanghai to Build Factory in China

https://www.wsj.com/articles/tesla-strikes-deal-with-shanghai-to-build-factory-in-china-1508670181

Tesla Inc. has reached an agreement to set up its own manufacturing facility in Shanghai. this move can potentially help Tesla make its mark in the fast-growing EV market that China has. This deal will enable the company to build their own fully owned factory in the city's free trade zone. In addition to this, since this arrangement is the first of its kind for a foreign auto maker, Tesla may be able to slash the cost of production for its cars. However, it is said that it will still likely incur China's 25 % import tariff.

Tesla is currently working on the various details of the trade with China, such as timing and other aspects. President Trump plans to visit Beijing early next month to help with the deal, even though he has been critical of China's Trade Policies in the past. This deal will be revolutionary because in the past, foreign countries have only been able to team up with China in producing these vehicles, and would have to split the profit between themselves and their chinese partners. This deal will enable them Tesla to keep all of its profits and only have to pay the import tariff. According to one of the Company's spokespeople, Tesla is trying to finalize the deal by the end of the of the year. 

This plan is being made because China already has the largest electric vehicle industry in the world and it is still predicted to grow immensely. In fact, officials are even working on a plan to ban gasoline.China had previously circulated a proposal that would allow electric-car makers into the country without local partners if they were to locate in the so-called free-trade zones. The government set up the country’s first such zone in Shanghai in 2013, and has since approved 10 more around the country. This deal, if successful, is also said to be able to put the US in good standings with the Chinese Government. So this deal has the potential to be very influential and revolutionary on many levels.