Chinese Government Says Talks Still on for Tesla to Build Manufacturing Plant

Despite Tweets from CEO Elon Musk, China confirms talks are still on.

byRob Stumpf|
Electric Vehicles photo

There's no denying that China is one of the top driving forces behind the electrification of the automotive industry. With stringent regulations for manufacturers and heavy import taxes on foreign entities, the barrier for automakers to enter the eastern market can be quite high. Despite these walls, the Chinese government says that they're still in talks for Tesla to build a manufacturing plant in Shanghai, according to Reuters.

Earlier this week, Tesla CEO Elon Musk blasted Chinese automotive import tariffs in a Tweet replying to U.S. President Donald Trump. Musk cited high costs of import taxes as being one of the driving forces behind why domestic automakers are having trouble breaking into the Chinese auto market. According to Musk, there is a tenfold difference between U.S. import duties (2.5 percent) and that to import a foreign vehicle into China (25 percent).

After striking an alleged deal back in October 2017, Tesla's China plant seemed all but in the bag. Naturally, Musk's latest Tweets raised eyebrows to onlookers and threw up a yellow flag to some, questioning if the words were spawned out of angst due to the higher entry cost to actually build an American car overseas, or if there was another problem with Tesla's original plans of building its location in China. Shanghai government officials told Reuters that both it and Tesla "had a shared goal" with regards to furthering China's ongoing stimulus and subsidization of electric cars.

“Both sides will keep looking thoroughly at plans in China. Currently the details are still under discussion, once anything is confirmed we will announce it as quickly as possible,” the officials continued in an email, “As Tesla CEO Elon Musk has said openly before, Tesla attaches great importance to its development and plans in China.”

Currently, China limits foreign ownership to just 50 percent of any venture. This has reportedly caused an ongoing negotiation conflict between the interested parties, with Tesla seemingly uninterested in founding a split venture with another Chinese automaker, though other domestic automakers such as Ford have already bitten the bullet to get ahead of the game. There has been no public word if Tesla and the Chinese government have come to a final agreement regarding the potential for an overseas manufacturing plant, but it's seemingly clear that Musk is aware of the advantage China is giving its domestic automakers.