Tesla Inc (NASDAQ:TSL), which can’t make electric cars fast enough to meet demand, is to build a factory in Shanghai.
The Wall Street Journal (WSJ) reported over the weekend that the US company had reached an agreement with the Chinese government to build a production facility in the city’s free-trade zone.
READ: Tesla fires hundreds of workers despite trying to ramp-up production
Tesla revealed last year that it had sold more than US$1bn worth of cars in China, so it makes a lot of sense, in terms of cutting shipping costs and getting access to cheap labor, to have a factory in the People’s Republic but the WSJ understands that Tesla cars would still be regarded as imports, and therefore subject to a 25% import duty.
Shares in Tesla were up 1.3% in screen-based trading ahead of the official open on Wall Street.