U.S. electric car maker Tesla Inc. had previously intended to buy land and expand its facilities in Shanghai to establish a global export center. The plan has been halted due to uncertainty caused by tensions between the U.S. and China, sources said.
The sources told Reuters that a 25 percent tariff on imports of Chinese electric cars under former U.S. President Donald Trump (Trump) is still in effect. Tesla therefore intends to limit the share of its “Made in China” production in global production.
Tesla’s Shanghai plant is designed to produce 500,000 vehicles per year and is currently producing Model 3 and Model Y vehicles at a rate of 450,000 per year.
Tesla is scrapping plans to significantly increase production capacity in China, at least for now, the sources said. The company did not bid for the site across the street from the plant in March of this year (2021).
The three sources declined to be named because those discussions are private.
Tesla said in a statement to Reuters that its Shanghai plant is “on track.
Tesla’s current factory in Shanghai covers 200 acres (80 hectares). Tesla has never indicated an interest in buying the land across the street from the existing factory, two sources said. That land is about half the size of the existing site and could increase the company’s capacity by another 200,000 to 300,000 vehicles.
A source with direct knowledge of the situation said the Shanghai government has been in talks with several companies about selling the land for new energy commercial vehicle production.
One of the sources said Tesla could expand production capacity at its Shanghai site to more than 500,000 vehicles. The company still has land available at its existing facility, which was designed to be used for production but is now made into a parking lot.
Tesla had earlier considered exporting its Chinese-made entry-level Model 3 to more markets, including the United States.
Tesla currently ships its Chinese-made Model 3 to Europe. The company is building a factory in Germany.
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