Tesla shares are seen opening higher Tuesday, amid reports the electric car maker is planning on building a new manufacturing facility in China. Numerous reports say that preliminary agreements have been signed on the facility that could have an annual output of 500,000 vehicles.
Tesla shares ended the US Monday trading session higher at $318.51. The stock is also trading higher in pre-market activity.
New Tesla factory?
A number of reports, including one from Bloomberg and a local Chinese news outlet, state that Tesla has signed agreements with ‘local entities’ to build a new Tesla factory in the country.
Specifically, local news website Knews said that Elon Musk’s car firm has signed an agreement with the Shanghai municipal government, Shanghai Lingang Area Development Administration and Lingang Group, Reuters reports.
The reports follow an initial agreement between Shanghai and Tesla in October 2017 for the US car maker to build a factory there. Further reported details include the likely capacity of the facility, which would be for some half a million vehicles to be produced, per year.
If the factory goes ahead it will be only the second car manufacturing factory to produce Tesla’s outside its Fremont, California facility.
Next steps follow US-China tariff imposition
Although talks on Tesla’s China factory plans have been ongoing for some months, this latest step - if confirmed – comes as the US and China remain locked in disagreement over trade. Indeed, both countries just last week imposed a plethora of new trade tariffs on each other’s imports.
The move to manufacture Tesla vehicles in China will likely pay dividend for the electric car maker. The EV market is strong in China and demand for Tesla vehicles is no doubt a major factor behind Musk’s plans.
It will, however, be interesting to see what reaction – in any – US President Trump will have to Tesla’s China plant plans. Trump was derisory towards Harley-Davidson’s plans to shift some of its manufacturing capacity outside of the US amid the ongoing trade disagreements the president is having.