Tesla has joined the list of companies that are setting up their manufacturing facility in China. According to some media reports, Tesla has entered into an agreement with Shanghai government to open a manufacturing facility in the trade-free zone of the city. The agreement allows Tesla to own an entire factory instead of getting into partnership with any local manufacturer, this will help the automaker to cut down the cost of manufacturing and sell cars at cheaper rates.
China is following an aggressive policy to push electric vehicles in the country, it is also a huge market for electric cars, the China Association of Automobile Manufacturers has recently said that 700,000 electric cars will be sold in the China in 2017 only. The automakers around the world are eyeing this market and thus a number of automakers like GM, Toyota, Daimler, Volkswagen etc have either already set up their manufacturing facility or are in the process of opening up their manufacturing facility in the country.
The manufacturing prowess of the country also allows the automakers to manufacture cars at a cheaper cost and thus provides opportunity launch their cars in other markets too at competitive prices. Tesla that has changed its strategy and is focusing on mass manufacturing with Model 3, knows that for it to be successful Chinese market is crucial and so this step by the company is not unexpected.