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Tension Between US and China Affects Tesla’s Expansion Plans

Tension Between US and China Affects Tesla’s Expansion Plans

Tesla was considering acquiring land in Shanghai, but the growing tension between China and the United States has led the electric car manufacturer to suspend the operation. Sources quoted by Reuters indicate that plans to expand its existing factory in the province to create a global export hub have been put on hold.

Part of the justification will lie in the 25% tariffs imposed on imported Chinese electric vehicles, on top of the duties passed during Donald Trump’s administration. In this scenario, Tesla will prefer to limit the proportion of cars manufactured on Chinese territory in order to reduce the taxes associated with each unit sold.

This new strategy comes in contrast to the plans that the company led by Elon Musk had until recently: Tesla intended to increase exports of Model 3 cars manufactured in China to an increasing number of markets, also including the US. Now it reverses course and aims to export only to Europe, where it is building a factory in Germany.

As for the factory that Tesla currently has in Shanghai, it has the capacity to produce up to 500,000 cars per year, currently having in charge the Model 3 and Model Y models. According to Reuters, the total capacity is not being used, since 450,000 vehicles are produced annually.

To the same news agency, Tesla guarantees that the factory is developing as planned, but does not comment on the possibility of suspending or not the purchase of land that would allow the expansion.


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