Tesla Plans Production Facility in China

Tesla Inc. (TSLA) is planning to open a plant in China and is set to sign a memorandum of understanding with Shanghai-area authorities, according to a Bloomberg report that cites unnamed sources.

The new plant is expected to rival Tesla’s only other assembly plant in the U.S. with the capacity to make 500,000 vehicles per year. Musk has said he expects the plant in Fremont, California, to also produce 500,000 vehicles by the end of the year. In the first half of the year, Tesla has churned out 88,000 vehicles after a series of production delays.

Tesla CEO Elon Musk is scheduled to be in China this week. Tesla has reportedly signed agreements with Shanghai Lingang Development Administration, Shanghai municipal government and Lingang Group for the factory.

Tesla shares were up 2.7% early in Tuesday’s session. The stock has been volatile the last year, up 2.5% in the past 52 weeks.

Tesla’s Global Expansion

Tesla has been exploring manufacturing in China for at least a year. The move recently became more crucial as China imposed a 40% import tariff on U.S.-made cars, which caused Tesla to raise its prices.

Similarly, Harley-Davidson Inc. (HOG), announced late last month that it would move some production out of the U.S. because of the escalating trade tensions, including retaliatory tariffs from the European Union. Harley said it could lose up to $100 million because of new tariffs. (See also: Harley-Davidson Enters Bearish Territory on Tariff.)

The Silicon Valley-based electric carmaker has said it will reveal plans to open a new plant in Europe by the end of the year.

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