Tesla to open Shanghai plant with capacity of 500,000 cars a year

Tesla's North American assembly lines are humming at last but its plans for Asia dwarves its current operations.

Reuters reports Tuesday the Californian company has signed agreements with Shanghai authorities that will allow it to open a plant in the Chinese city with an annual capacity of 500,000 cars:

Tesla has been in protracted negotiations to open its own factory in China to help bolster its position in the country's fast-growing market for electric cars and to avoid high import tariffs.

China is already the top manufacturer of electric vehicles and the batteries that power them and is set to increase its share of the global market in coming years.

AlixPartners, a US consulting firm, forecasts the Chinese vehicle market will grow to 29.1m units this year, on its way to 38.2m in 2025 (equal to 52% of global volume growth over that period). By 2030, 40% of vehicle sales in the region will be EVs.

The European car market is likely to expand by 2.5m units by 2030 to reach 23.1m units annually with a roughly 30% penetration of EVs by that time. The US will lag and only 16-21% or 2.6m–3.5m of sales in 2030 is likely to be electric.

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