Tesla Strikes Deal on New 500,000-Car Plant As New Chinese EV Tariffs Take Effect [News]

The company may accelerate its plans to build a Chinese factory in light of recent tariffs on imported electric cars.

Tesla Strikes Deal on New 500,000-Car Plant As New EV Tariffs Take Effect
Tesla is planning a new plant in Shanghai that may double the company’s production capacity. [Photo: Tesla]

The Chinese government just imposed larger tariffs on imported electric cars.

Teslas just become much more expensive. In response to a 25 percent tariff the U.S. implemented on $34 billion worth of Chinese goods, U.S.-built Tesla models are now facing a 40 percent tariff as they reach Chinese shores. China bumped the duty on electric cars up from 15 percent.

The Wall Street Journal reported that prices on Tesla’s Chinese website jumped 20 over the weekend as the new tariffs went into effect. According to the Tesla website, a base Model S 75D costs 939,400 yuan, or $141,700. That’s nearly double what the model costs in the United States ($74,500). At over $140,000, Teslas sold in China costs approximately $21,000 more than last week, according to Carscoops.

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[Photo: Tesla]

Tesla gets approval for Chinese factory

The recently imposed tariffs may accelerate Tesla CEO Elon Musk’s recent deal with Chinese authorities to build a plant in Shanghai. The new factory will be Tesla’s first outside the United States, and is slated to double the company’s manufacturing capacity. When it’s complete, as many as 500,000 cars per year will roll out of the plant.

It’s important to note that Musk was in talks to build a Chinese factory long before these new tariffs were imposed. Tesla has been in prolonged negotiations to bolster its production to meet demand in the world’s fastest-growing EV market.

However, if the tariffs remain in effect for an extended period, Tesla may shift resources to complete the factory more quickly. That way it can drastically reduce the cost of its vehicles and sell them to Chinese customers. According to the Carscoops report, Musk’s original plan was to serve the Chinese market with the new plant. Tesla will also supply other markets in Southeast Asia from the new facility. The new factory will build the Model 3 and upcoming Model Y crossover. According to reports, it will also produce the Model S and Model X.

According to a Reuters report, Tesla’s new Shanghai plant will not impact U.S. manufacturing operations. A spokesperson stated that Tesla’s American operations will continue to grow.

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