Tesla Motors to set up manufacturing base in China

Tesla Motors Inc. has chosen Shanghai as the location of its production base in China, says a report from Bloomberg, which also states that it might invest about $9 billion in the country.

A Shanghai government-owned company called Jinqiao Group has signed a non-binding MoU with Tesla to build its production facilities in the municipality, as per a person aware of the matter who requested anonymity.

As per the report, each party might be investing about 30 billion yuan ($4.5 billion) in the partnership, and Jinqiao will put up land for most of its share. Cities of Suzhou and Hefei are participating for the investment from Tesla.

"This would be a major win for Tesla and Shanghai," said Steve Man, an auto analyst at Bloomberg Intelligence. "The investment will probably include a nationwide dealership network, superchargers, R&D center and potentially a second 'Gigafactory."'

By manufacturing in China, Alto, California-based Tesla will be able to avoid a 25% import levy, which would make its electric vehicles more competitive against luxury-brand rivals like BMW and Audi. Shanghai, which is one of the major auto manufacturing hubs in China, also serves as a financial center and sea port.

In the past, several global automakers have set up manufacturing plants in China via JVs, owning up to 50% stake. While Ford Motor Co. partnered with Changan Group in the southwestern municipality of Chongqing, Hyundai Motor Co. works with BAIC Group in Beijing; similarly, Nissan Motor Co.'s China venture is based in Wuhan.

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