Tesla CEO Elon Musk has been on an international trip over the past week. First in Australia earlier this week and in Beijing yesterday.
While in China, Musk met with Chinese Vice Premier Wang Yang. The nature of the discussion wasn’t disclosed, but it comes as Tesla is looking for 2 or 3 more locations to build Gigafactories for both batteries and cars.
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Musk and other company officials have talked about building a Gigafactory to manufacture batteries and electric vehicles in China for the past 3 years and while they have been several reports of finalized plans, they have all been shut down.
The most recent report came last month when the Southern Metropolis Daily, citing multiple sources, claimed that Tesla had struck a deal to build a factory without a joint-venture in China’s Guangdong province. The company quickly denied the report, but without necessarily denying that a factory is coming to China.
Last year, reports suggested that Tesla executives visited locations in the Suzhou region and talked to potential manufacturing partners. And earlier in 2016, Musk confirmed that the automaker plans on securing a location and a local partner for a manufacturing facility in China by the middle of 2016, but an announcement never came.
Things got more exciting when Tesla announced earlier this year that it plans to select 2 to 3 more Gigafactory locations by the end of 2017. Due to the previous comments about establishing manufacturing capacity in China, one of the plants is expected to be in the country.
Additionally, Chinese holding firm Tencent acquired a total 5% stake in the company earlier this year and now Musk shares a picture of himself meeting with Vice Premier Wang Yang via Twitter:
Tesla could have a strong interest in negotiating with the government as it started relaxing its domestic production policies when it comes to electric vehicles. In order to accelerate the production of electric cars in the country, the government said that it was willing to lift the obligatory joint-venture with a domestic company, which would open the door for Tesla to establish local manufacturing capacity and change the company’s earlier plans.
In the past, company officials have linked the construction of a Chinese plant with the launch of the Model 3 in the country. A Tesla factory in China would be for domestic production, not for export, in order for Tesla to get rid of import duties on its vehicles.
Despite having to import its vehicles, Tesla China tripled its sales in 2016 to over $1 billion. A local factory would probably help the company keep the momentum in China, especially with the upcoming less expensive Model 3.