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Tesla in talks to set up manufacturing facility in Shanghai

Customers look at a Tesla Motors Model S electric vehicle at the company's showroom in Beijing. Photo: Bloomberg News

US electric car manufacturer Tesla Motors is in talks with the Shanghai municipal government about the feasibility of building a manufacturing plant in the city's free trade zone, a Chinese official confirmed on Thursday.

Gao Feng, a spokesperson of China's Ministry of Commerce, made the remarks in response to a question raised at a regular press conference. But Gao refused to give further details about whether Tesla would be allowed by the government to be the sole owner of the manufacturing facility.

According to the Chinese law, foreign carmakers must cooperate with a Chinese partner if they want to build a factory in the Chinese territory.

"China has consistently held a welcoming attitude toward foreign investment in China, especially in the fields of high technology, energy conservation and environmental protection as well as emerging strategic industries," Gao said.

The commerce ministry's press conference was held just two days after the Communist Party of China (CPC) concluded its 19th national congress, where Xi Jinping pledged that foreign investors would be given wider market access and their legitimate rights and interests would be protected under a policy that advocates further openness.

Gao's statement is an official response to a previous Wall Street Journal report saying that Tesla had reached an agreement to set up a wholly owned manufacturing facility in Shanghai's free trade zone, a move that will enable the American electric car producer to sharply reduce production costs.

In the recent years, there have been a series of rumors about Tesla's plans to establish a factory in China in partnership with local partners, with the latest one surfacing in June when the American electric car manufacturer reportedly negotiated with Shanghai Lingang Holdings Co and Shanghai Electric Group Co to explore the possibility of establishing a factory in Shanghai. However, the two Chinese companies refuted the rumor.

As early as January last year, Elon Musk, chief executive officer of Tesla, claimed that the company was seeking a local partner for its planned establishment of a plant in China, the world's largest electric car market.

The chief executive officer reiterated the importance of establishing "a gigafactory in China and Europe to serve the markets there" in a telephone conference in August.

With the growing popularity among the status-conscious, wealthy Chinese consumers and helped by its efforts to open service centers and roll out fast-charging stations, Tesla garnered $1 billion in revenue from China in 2016. In the same year, more than 250,000 pure electric cars were sold in China, representing an increase of 121 percent from a year earlier, according to statistics from the China Association of Automobile Manufacturers.

Signs of deeper localization

Despite uncertainties about Tesla's plans to establish a manufacturing facility in Shanghai, the Palo Alto, California-based company appears to have strengthened its efforts to tap the Chinese market.

Recently, it launched a massive campus recruitment drive in China's first-tier and second-tier cities including Beijing, Shanghai, Nanjing and Chongqing, offering positions in sales, after-sales services, research and development, engineering and information technology, according to a report published on yicai.com, a leading business news provider in China.

A recruiter of Tesla revealed that the campus recruitment campaign will offer nearly 500 vacant positions for Chinese job applicants, said the report.

In addition, the company is also stepping up efforts to improve its supercharging network in the country.

On October 23, it started the operation of what it called the "world's largest Tesla supercharging station", which is located in an underground garage at the Lilac International Business Center in Shanghai. The newly opened supercharger station is equipped with as many as 50 superchargers, enabling Tesla to get closer to its goal of installing 1,000 superchargers in China by 2018.

So far, Tesla has set up more than 700 superchargers across some 170 Chinese cities. It has also promised to modify its charging port to meet China's national charging standards.
 


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