Tesla Motors is said to be eyeing up Shanghai as the base for its manufacturing facilities in China according to sources close to the matter.
According to Bloomberg, Tesla is rumored to have signed a non-binding agreement with Jinqiao Group, a Shanghai government-owned company, on building production facilities in the city.
Both parties would invest $4.5 billion toward the $9 billion project, with Jinqiao Group required to provide Tesla Motors with ample lands to build the factory. If the rumors are true, the investment would be larger than the $5.5 which Disney splashed out to construct its Shanghai theme park.
“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.”’
Jinqiao Group has so far denied that any deal has been reached with Tesla. “[Jinqiao Group] has to date not signed any MOU or documents with any individuals on a Tesla joint venture factory,” the company said in a statement to the Shanghai Stock Exchange.
Production in China would help Tesla avoid to punitive 25 percent import levy on imported cars, allowing the company to better compete against BMW, Audi and other manufacturers occupying the luxury segment of the market.
Tesla executives have previously expressed their interest in setting up Chinese production facilities, so even if Jinqiao is not the chosen joint venture partner, it is likely that the electric car manufacturer will at some point be making its presence felt in mainland China.
By Katie Ngai
[Image via Tech News // Video via Youtube]