Rumor of upcoming Tesla Gigafactory announcement in China emerges again

While Tesla is undoubtedly looking for new locations to build upcoming new Gigafactories and that one in China is likely, Tesla has been shutting down recent rumors about deals to establish manufacturing capacity in the country.

Now yet another rumor about a factory, this time in Shanghai, emerged today.

Bloomberg China reported based on an anonymous source:

“The agreement with the city of Shanghai would allow Tesla to build facilities in its Lingang development zone and could come as soon as this week, said the people, who asked not to be identified because the negotiations are private. Details are being finalized and the timing of the announcement could change. Tesla would need to set up a joint venture with at least one local partner under existing rules and it isn’t immediately clear who that would be.”

Tesla has yet to comment on the report. We will update if it changes.

Last year, reports suggested that Tesla executives visited locations in the Suzhou region and talked to potential manufacturing partners and earlier this year, the reports suggested that the factory would be in Guangdong.

Earlier in 2016, Tesla CEO Elon 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.

Interestingly, this new report comes just over a month after Musk met with China’s Vice Premier.

It would make sense for Tesla to start establishing manufacturing capacity in China since it has been growing fast over the last year and it could avoid a 25% import duty 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.

Additionally, Chinese holding firm Tencent acquired a total 5% stake in the company earlier this year and the new investor, which owns important Chinese tech services, like WeChat and JD.com, could help Tesla better navigate the Chinese market.