Given the current trade scenario between the US and China in particular, US businesses are releasing that it doesn’t make sense to sell products in China manufactured elsewhere as it works out to be a huge cost disadvantage to them.
As a result, many US-based corporate are making the beeline to China in a bid to catch up with the domestic market.
US-based Tesla is also among the many planning to localise production in China and has reportedly acquired land near Shanghai to build its first factory.
Why did it take so long for Tesla to decide? Well, Tesla was among the few Western automakers that went into a wait-and-watch mode prior to committing its investments in China until the country relaxed its foreign ownership requirements. Previously, US and European automakers had to establish a 50:50 joint venture with a Chinese firm to build cars in the world’s largest automotive market. The Tesla factory will be located in the Lingang area southeast of the Shanghai city centre and is expected to begin producing cars and battery packs within three years with an initial capacity of 250,000 vehicles.