Tesla reportedly made deal to open a manufacturing facility in Shanghai

Megan Rose Dickey

Tesla has reportedly made a deal with the government in Shanghai to open up a manufacturing facility in the city's trade-free zone, the Wall Street Journal reports.

Foreign car-makers traditionally partner with local manufacturers, but that will reportedly not be the case with Tesla. Instead, Tesla will own the entire factory. That means Tesla will be able to cut some costs of production and ultimately the sale price of Teslas in China, but it will likely still be responsible for paying China's 25 percent import tariff.

Rumors of this deal first surfaced in June, when Bloomberg reported Tesla was in talks with Shanghai's local government to build its cars there for the first time. Tesla later confirmed it was in talks to build a factory in Shanghai.

China has the world's largest vehicle market and has aggressive targets for electric cars. The Chinese government is aiming to sell seven million electric vehicles a year by 2025. In September, China ordered all car-makers operating in China to start making EVs by 2019.

The timing of the official announcement is unclear. I've reached out to Tesla and will update this story if I hear back.

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