U.S. electric car maker Tesla is preparing to halt plans to buy land in Shanghai to expand its factory into a global export hub in light of uncertainty caused by tensions between the United States and China, according to sources cited by Reuters.
The sources pointed out that the U.S. imposed a 25 percent tariff on electric vehicles originating from China (including assembly) during the administration of former President Donald Trump. Since the U.S. is still enforcing this measure, Tesla intends to limit the proportion of its own products produced in China.
It was reported that Tesla decided during March to abandon its bid for a lot across the street from its existing Shanghai plant because it did not plan to significantly increase its production capacity in China, at least until then.
But faced with the news, Tesla said in a statement sent to Reuters that the company’s Shanghai plant was “on track for development.
Tesla had previously considered expanding exports of its Chinese-made entry-level Model 3, targeting more markets such as the United States and Europe. But Tesla is also currently setting up a new factory in Germany.
Tesla’s planned Shanghai plant can produce 500,000 units per year, compared to the current annual output of 450,000 units, producing Model 3 and Model Y. Tesla’s planned site for the Shanghai plant expansion is currently a parking lot. The source said Tesla may also use the existing factory to expand its capacity.
In addition, the source said, the Shanghai government is currently negotiating with several manufacturers of new energy commercial vehicles, on the site of the factory.
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