Taking its biggest step yet into an overseas market, electric carmaker Tesla inked a deal Tuesday to begin building a manufacturing plant in China capable of producing 500,000 cars a year.
Tesla Chief Executive Elon Musk signed the agreement at an event in Shanghai, which will be home to the plant. The facility is slated to be Tesla's biggest other than its factory in Fremont. Musk signed what was called a "cooperative agreement" with the Shanghai Municipal People's Government to jointly work on building the plant, which a Tesla spokesperson called "Gigafactory 3."
In a statement from the Shanghai Municipal People's Government that was translated into English and which Tesla provided to this news organization, Musk said the Shanghai operation "will be a state-of-the-art vehicle factory and a role model for sustainability." Musk added that he wants the Tesla factory to add to what he called "the beauty and energy of Shanghai."
Tesla, which announced last June that it was in talks to build a plant in China, said it expects construction on the Chinese plant to begin "in the near future." It said car production there should begin about two years later, and that it should then be another two to three years after that for the plant to reach its 500,000 annual car-production capacity.
Musk had been talking for awhile about the possibility of Tesla opening a plant in China, but had held off due to laws on Chinese ownership of new carmaking facilities that would have forced Tesla to give up 50 percent of its ownership in any manufacturing operation. However, in May, China said it would do away with such ownership rules by 2022.
The Chinese plant announcement comes just after Tesla raised prices on its cars in China by more than 70 percent higher than those it sells in the United States. Tesla made that move amid an ongoing trade dispute between the United States and China that has led to cars and other imports from this nation being slapped with 25 percent retaliatory tariffs.
