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Tesla preparing to build factory in Shanghai?

by Justin King

The company has reportedly filed initial paperwork to establish a presence in China after authorities promised to loosen foreign ownership restrictions.

Tesla may have taken a small step forward in its plan to build a factory in China.

The California-based automaker has reportedly submitted registration filings to establish a local entity known as Tesla Shanghai Co. Ltd., according to Chinese media reports.

The company already operates under Tesla Motors Hong Kong Co. Ltd., which is listed as the sole shareholder of the new Shanghai-flagged corporation.

US media reports have speculated the Shanghai registration is a response to China's willingness to ease its foreign ownership restrictions for automotive factories. Established automakers long ago capitulated and formed a long list of 50:50 joint ventures with local firms to get an early foot in the door. The partnerships include a few of the most notorious builders of knockoff Western vehicles.

Tesla refused to build a factory in China unless the regulations were eased to allow full control of factories by foreign owners. Amid pressure from the Trump Administration and lobbying from Tesla, CEO Elon Musk recently praised China for a "willingness to open their markets" and said he believed "they will do the right thing."

Apparently contradicting the speculation in US media reports, however, Chinese news outlet Sina claims Tesla's Shanghai entity is focused on import/export and technology development instead of car manufacturing.

The South China Morning Post in February reported that Tesla had threatened to shift its presence away from Hong Kong after the government briefly eliminated incentive programs that reduced the effective sale price of electric vehicles. Anticipation of the change sparked a surge of demand, with 3,000 Tesla vehicles purchased in March 2017 alone, followed by a collapse that slashed sales to just 32 units from April through December.

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