Tesla in talks over Shanghai plant

American electric carmaker Tesla Inc is communicating with the Shanghai government about building a plant in the city, Ministry of Commerce spokesman Gao Feng said yesterday.

He also told reporters that rules for a Shanghai free trade port were being drafted.

Gao was asked at a press briefing if Tesla had gained approval to build its own factory in China rather than take part in a joint venture.

Gao had no further information on the situation but said: “The country always welcomes foreign investment, especially in high-technology, energy-saving and environment protection as well as strategic emerging industries.”

He added: “Following the 19th National Congress of the Communist Party of China, we will greatly loosen market access, open wider, spare no effort to foster a law-based, internationalized and convenient business environment, while taking increased measures to protect the legitimate rights of foreign investors.”

Tesla faces two possible routes to invest in China as the country forbids fully foreign-owned car manufacturers. Tesla could set up a joint venture with a domestic partner, in which it would share profits and, potentially, technology. The other route would be to produce in Shanghai’s free trade zone, which will allow the company to own its plant, but still be subject to a 25 percent import tariff.

Tesla said in June that it was in talks with the Shanghai government and that it would detail its China manufacturing plans by the end of the year.

On Monday, Tesla opened a massive 50-stall supercharger station in the city’s Pudong New Area, which it said is the company’s largest supercharger station worldwide.

Tesla’s electric charging network already covers more than 170 cities in China, where it has built over 700 superchargers. That number is expected to exceed 1,000 by the end of the year.

As the world’s largest car market, China is also the world’s biggest electric-vehicle market and the fastest growing market for new-energy vehicles.

The market is expected to continue growing fast, especially since the government plans to require that all manufacturers’ sales include a certain percentage of electric vehicles from 2019.

More than half a million new-energy cars were sold in China last year, and the government is targeting sales in the millions in coming years.

China is also mulling plans to ban fossil-fuel burning cars by an unspecified date, following decisions by France and Britain to outlaw such sales from 2040 to limit emissions.

Gao told reporters that a Shanghai free trade port would meet the highest global standards, with an advanced trade regulatory system and financial, foreign exchange, investment and exit-and-entry rules according to international practice.

Gao said the setting up of a free trade port is part of the plan to deepen reforms and opening-up in Shanghai’s free trade zone. He said China was comprehensively promoting opening-up as pledged in a report to the Party’s congress.

The government will balance relationships between foreign investment and outbound investment, and promote further opening-up in the manufacturing and services sectors, he said, along with expanding the trade in goods and forging mutual development with trading partners.