Electric cars – Tensions between US and China: Tesla suspends expansion plans for its Shanghai plant

The U.S. company plans to expand its car factory in Shanghai as an export hub due to tensions between the two countries, many familiar with the matter told Reuters. Until recently, Tesla had planned to expand exports of the Model 3 made in China to other countries, including the United States. The plan was dropped because a 25 percent penalty on imports from the People’s Republic, introduced under former US President Donald Trump, continues to apply. Tesla has so far delivered the Model 3 from Chinese production to Europe. A new factory is currently under construction in Gronight, a suburb of Berlin.

The Model 3 compact car and Model Y full electric mid-range SUV will roll from the assembly line in Shanghai. The space is designed to produce 500,000 vehicles per year and is already approaching the capacity limit with 450,000 units. In March, Tesla dismissed an asset bid because the company did not want to significantly increase productivity in China, at least for now, three people said.

Tesla has never announced its intention to acquire the site, with two locals saying it could build an additional 200,000 to 300,000 units. No such plan has been announced yet. In response to a Reuters request, the carmaker announced that the factory in Shanghai would be “built as planned”. The Shanghai City Government did not respond to requests for comment. Tesla still has land that could be considered for a plant expansion, but is used for parking spaces.

Worldwide demand for electric cars is increasing due to climate protection requirements. So the electric car pioneer from Silicon Valley is building a network of factories around the world and wants to get as big a bag as possible. At the same time, the American company faces growing competition. More and more manufacturers, including China, are starting to build battery-powered vehicles.

(Reuters)