Tesla to set up Manufacturing Base in Shanghai, Report Indicates

Tesla reportedly made deal to open a manufacturing facility in Shanghai

If the Tesla agreement is reached, the EV maker would be the first foreign manufacturer to build vehicles in China without a local manufacturing partner.

China's EV market, already the world's largest, is expected to experience rapid growth over the coming decade, as the Chinese government pushes a plan to eliminate fossil fuel-burning vehicles entirely over the coming decades. The automaker may still be subject to tariffs, however, as goods entering the country from a free-trade zone are still considered to have been imported. Tesla would have to pay the 25% duty on cars and could drastically reduce its production costs.

Tesla's cars reportedly cost 25% more in China than it does in the US.

Electric vehicle firm Tesla Inc (NASDAQ:TSLA) may well see its shares in focus on Monday after news at the weekend that the group has struck a deal with the Chinese government in Shanghai to build a production facility in the city's free-trade zone.

The new report comes after Consumer Reports said Tesla Inc's new Model 3 sedan is likely to have "average" reliability despite production snags because it uses older technology rather than newer innovations that are causing problems for automakers.

The move makes flawless sense for Tesla, which confirmed in June that it was in talks to open a factory in China. In future we can see this in Shanghai's free-trade zone.

Tesla is hoping to complete this deal before the end of 2017.

However, the Chinese government reportedly has no incentive to offer the Silicon Valley tech firm and will not provide it preferential treatment, likely because this might be seen as a bargaining chip for other auto makers.

Shanghai-based Tesla Model S owner Jason Man verified with Teslarati that he was able to charge at the underground Supercharger station on Monday afternoon local time.

In March, Tesla won an investment worth $1.78 billion from Tencent Holdings, a major internet company with close ties to the Chinese government, to use as funding for its expansion in China.

China has identified new-energy vehicles as a strategic emerging industry and aims to boost annual sales of plug-in hybrids and fully electric cars 10-fold in the next decade. The Chinese government is aiming to sell seven million electric vehicles a year by 2025.

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