Tesla Plans to Sink $5 Billion into Shanghai Factory to Boost Chinese EV Sales

Tesla Model 3

by | Aug 1, 2018

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Tesla Model 3The trade war between China and the US is making it more imperative than ever for Tesla to establish production in that country, according to Industry Week; The Chinese EV market is the world’s largest market for electric cars, and the company has plans to sink $5 billion into its factory near Shanghai, the article says.

Analysts, however, question whether the company will be able to raise the capital required for such a large project. But according to a source familiar with the matter, Tesla is planning to raise a portion of the $5 billion from local Chinese partners, Bloomberg reports.

 

Increasing Sales, Increasing Prices…

China hopes to increase sales of electric vehicles by a factor of ten between now and 2025, and to have 100% electric vehicles by 2030. But following President Trump’s levies on Chinese goods, China imposed a 25% additional tariff on imports of US made cars, and Tesla was forced to respond by raising prices in China by about 20%, according to CNN. This could affect the company’s ability to boost sales as much as it hopes.

In the meantime, Chinese EV startups are scrambling to launch their EV products before Tesla nails down the market.

China accounts for nearly 20% of the company’s total sales.

 

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