Tesla looking to build a factory in China

Shanghai factory, South Korea entry, and China financing program are all part of Tesla’s Asian expansion plans.

A man walks past a Tesla charging station in Beijing on December 15, 2016. Auto sales in China, the worlds biggest car market and crucial to manufacturers worldwide, reached a new peak in November, data from an industry group showed on December 12. Sales reached 2.94 million units last month, up 16.6 percent year-on-year, the the China Association of Automobile Manufacturers (CAAM) said in a statement. / AFP / GREG BAKER (Photo credit should read GREG BAKER/AFP/Getty Images)
A man walks past a Tesla charging station in Beijing on December 15, 2016. Auto sales in China, the worlds biggest car market and crucial to manufacturers worldwide, reached a new peak in November, data from an industry group showed on December 12. Sales reached 2.94 million units last month, up 16.6 percent year-on-year, the the China Association of Automobile Manufacturers (CAAM) said in a statement. / AFP / GREG BAKER (Photo credit should read GREG BAKER/AFP/Getty Images)
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How will Tesla reach its sales projection of 500,000 units by 2018? The answer may lie to the east. Tesla Motors is looking to broaden its sales throughout Asia with a combination of production- and sales-expansion plans in China and South Korea, respectively. The California-based electric-vehicle maker is also making financing easier in China. Tesla’s Asia-Pacific region sales began in China in 2014.


One big question with 500,000 is how will Tesla do it? Back when Tesla’s Fremont, California plant was a Toyota-GM joint venture, production peaked at 428,000 units. In other words, most people assume Tesla will need a second production site, and fast. To that end, Tesla
signed a memorandum of understanding with Shanghai government-owned Jinqiao Group for a Shanghai factory that will cost about $9 billion to build, the
Business Times says, citing a person familiar with the process. Having a local factory will allow Tesla to avoid the 25 percent tax levied on all imported vehicles and will let the company better compete with Audi and BMW, as well as with China-based BYD. SAIC Motor Corp., which has partnerships with both Volkswagen and General Motors, is also based in Shanghai. Suzhou and Hefei are also being considered as potential Tesla factory sites.


Meanwhile, Tesla is also
readying itself to start sales in South Korea, as the company has listed sales, engineering, and recruiting jobs on its website for South Korea, according to
Automotive News. Tesla confirmed to the publication that it will set up an office and Seoul and has registered as a corporation in South Korea. Tesla has already said it will sell the Model 3 in South Korea. Notably, South Korea-based Hyundai, along with sister company Kia, are planning more than two-dozen electrified vehicle models in South Korea by 2020, including a plug-in version of the Hyundai Ioniq compact hybrid by the end of the year.


Finally, Tesla is trying to spur more sales in China by
launching zero-downpayment, zero interest rate financing programs with China-based bank Fosun, according to
Electrek. For the Model S 90D, the zero-interest-rate applies to a one-year financing program; a 2 percent rate applies for a two-year program; and a 6 percent rate is for a three-year program. Under a separate program, customers can buy a Model S 75 with no money down. The financing plans will last through the end of the year. Tesla’s “cheapest” financing program had been for about $3,450 a month for a Model S.


Tesla didn’t immediately respond to a request for comment from
Autoblog on Tuesday morning.


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