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Tesla CEO Elon Musk1 said the company would announce the location for its Gigafactory in China later this year.
The factory would become a new manufacturing base for Tesla's two mass-market electric cars, the Model Y and the Model 3.
Tesla currently exports cars to China from its plant in Fremont, California.
The company accounts for around 9 percent of sales in China's booming electric vehicle market.
Despite the popularity of the brand, for many young people, the high prices of the cars put them out of reach.
"For young adults like me, a Tesla is way too expensive."
"If Tesla can bring down the price, with its reputation, I do see it becoming more competitive."
In China, domestic brands are in the driver's seat, with BYD and BAIC Motor occupying the top two spots in the electric vehicle market. Jiang Jun, General Manager at EVBUY, said that an overseas brand like Tesla might not be the first choice for the average Chinese consumer.
"For most customers, electric cars are something that is brand new to them. Many buyers don't have an adequate understanding of electric cars. Most of them would choose a local brand for their first purchase. Maintenance requests are usually responded to more quickly."
Tesla sells 800 to 1,000 units a month on average in China, and its vehicles are subject to a 25 percent import tariff2. By starting local production, Tesla can potentially lower its prices, as well as raise its profits.
But in April, President Xi Jinping vowed3 to lower import tariffs4 on cars, and lift limits on ownership for foreign automakers who want to manufacture vehicles in China. Dr. Xu Yun, a researcher at Shanghai's Academy of Social Sciences, says the company will have to consider this change carefully.
"I think Tesla will have to think twice and do their math again. If the Tesla Gigafactory is built in Shanghai's Free Trade Zone with a tariff exemption5, they'll have to calculate the production capacity and the land price. It could be very costly6 and lots of work to negotiate with the Shanghai government. So there are a lot of cost factors to consider. If the import tariffs are lowered, given the high cost of building the plant, whether they keep importing or build a plant is something Tesla will need to do more work on to evaluate."
Dr. Xu said that Tesla's expansion into the Chinese market could be beneficial for the country, as it could increase competition with domestic brands, and provide a boost to the development of China's electric vehicle market.
China's Association of Automobile7 Manufacturers predicts that sales of fuel cell hybrid8 and battery powered vehicles could top 1 million units in 2018. China would then account for around half of the world's market in electric vehicles.
1 musk | |
n.麝香, 能发出麝香的各种各样的植物,香猫 | |
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2 tariff | |
n.关税,税率;(旅馆、饭店等)价目表,收费表 | |
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3 vowed | |
起誓,发誓(vow的过去式与过去分词形式) | |
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4 tariffs | |
关税制度; 关税( tariff的名词复数 ); 关税表; (旅馆或饭店等的)收费表; 量刑标准 | |
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5 exemption | |
n.豁免,免税额,免除 | |
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6 costly | |
adj.昂贵的,价值高的,豪华的 | |
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7 automobile | |
n.汽车,机动车 | |
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8 hybrid | |
n.(动,植)杂种,混合物 | |
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