Tesla sets up new company in Shanghai’s Free-Trade Zone ahead of Chinese Gigafactory announcement

Tempo de leitura: 3 minutos

As per CEO Elon Musk’s recent comments, Tesla is expected to soon announce a project for a Gigafactory in China. Ahead of the announcement, Tesla has registered a new company in Shanghai’s Free-Trade Zone – seemingly in preparation for this new manufacturing project.

The new business license has been reportedly approved on May 10th, according to Sina Finance.It was registered by Tesla’s Hong Kong subsidiary and approved by the Shanghai Pudong New Area Market Supervision board.

They described the scope of the business in the filing: “Technical development, technical services, technical consultation, technology transfer in the field of electric vehicles and spare parts, batteries, energy storage equipment, photovoltaic products, wholesale and commission agency (excluding auctions) and import and export business of the above-mentioned similar products, And provide related supporting services, electric car display and product promotion.”

It has been set up with 100 million yuan (~$15 million USD) working capital to start. We have contacted Tesla for a comment on the new subsidiary and we will update if we get an answer.

During Tesla’s Q1 report earlier this month, Musk said that he ‘expects to announce the location of the Tesla Gigafactory in China soon.’ Musk added that Robin Ren, Tesla’s head of sales who was also born and raised in Shanghai, was leading the negotiations with the local government.

The automaker had been trying to set up a factory in China for years, but the effort has been stalled for a long time due to the government’s protectionist rules that force foreign automakers to partner with a local company in order to establish manufacturing capacity.

The Chinese government has recently announced a change for that rule, which would now allow Tesla to own 100% of an electric car factory in the country. Tesla’s new Chinese subsidiary has been set up in Shanghai’s Free-Trade Zone, which the government has been using to test more open free-market politics, including more relaxed laws about manufacturing.

Musk also recently reiterated that all future Gigafactories, which are called ‘giga’ because they produce gigawatt-hours worth of battery capacity, will also include full vehicle production:

In the future, all Gigafactories will include vehicle production. So, right, now we’ve got vehicle production and battery production. Like, battery production and motor and power electronics and charger production are at Giga 1 and Fremont car factory. But future Gigafactories will all incorporate vehicle production.

A factory project in China would likely be the first example of such a factory and Panasonic could again be a partner for the battery manufacturing part. The new plant is seen as a game changer for the company’s business in China, which is the biggest auto market in the world.

The California-based automaker has doubled its sales to over $2 billion in China last year and they by far lead foreign electric car sales in the country, but Tesla’s vehicles are currently slapped with a 25% import duties.

In order to continue to grow and stay competitive with the many new EVs coming to market in China, the company needs to find a way around this import duty and local production, especially for the less expensive Model 3, which is expected to soon launch in China, seems to be the solution.

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