Tesla China Agreement
The opening of a factory in China was the key to avoiding a further escalation of tariffs put in place by both the United States and China. There is still no end to political negotiations in sight, although the White House said in December it had reached a « Phase 1 » deal with Beijing to make « substantial purchases » of US-made goods, including agricultural, energy and manufacturing products. A signing ceremony is set for January 15, the president tweeted. Elon Musk, the CEO of Tesla, has signed a preliminary agreement with the Shanghai government for the construction of a Tesla factory in China. The new facility is expected to produce 500,000 vehicles per year and effectively double the company`s electric vehicle production in combination with the existing plant in Fremont, California. Tesla has signed a « cooperation agreement » with the Shanghai municipal government to build its third gigafactory and the first in China, the company announced today. Tesla says it should be able to produce 500,000 cars a year in the world`s largest electric vehicle market, although the company says it will take time for the plant to be up and running. In the face of the growing trade war between the United States and China, which has led Tesla to increase the price of its Model S and Model X vehicles in China by 20%, the electric car group will work to avoid the increase in tariffs. Beyond IP concerns, foreign companies traditionally believe that partnerships with Chinese companies are necessary to conclude favorable supply chain agreements with local manufacturers and to control local guidelines. Much of the investment in the Shanghai gigafactory is expected to be financed by Chinese banks and financial institutions. These include an agreement reached in March with Chinese lenders on a 12-month credit facility of up to US$521 million for the Gigafactory. Tesla will determine the volume of battery purchases based on its own needs between July 2020 and June 2022, CATL said in a stock exchange statement, adding that the deal does not impose any restrictions on Tesla`s purchase volume. SHANGHAI (Reuters) – China`s leading electric vehicle battery maker CATL 300750.SZ said on Monday it had signed a battery supply agreement with Tesla TSLA.O.
The phrase « competitive neutrality » is now a slogan in Beijing and productive deals like the one with Tesla make the government very substantially responsible. It is unclear whether the abrupt easing of restrictions is directly due to the pressure of the trade war or a general slowdown in the Chinese economy. Tesla, which has a long-standing battery supply deal with Japan`s Panasonic Corp 6752.T, said on its conference call last week that its pact with LG Chem 051910.KS and CATL was on a smaller scale. « We expect construction to begin in the near future, having obtained all necessary authorizations and authorizations, » the company said in a statement. « From there, it will take us about two years to start producing vehicles, and then another two to three years for the plant to fully start up to produce about 500,000 vehicles a year for Chinese customers. » The investment cap had previously halted Tesla`s initial plans, announced in 2017, due to concerns about IP security in the country. The rate of the new loan will be tied to 90 percent of China`s one-year benchmark rate, as will the 3.5 billion yuan rate, the first source said. This is an interest rate that Chinese banks offer to their best customers. IN OCTOBER 2018, BMW increased its stake in its joint venture with Brilliance China Automotive Holding Ltd. to 75 percent. Renault made headlines by entering into a fourth 50% partnership with Jianglin Motors in July 2019, hoping to develop the local EV market. Volkswagen issued a statement that it was committed to its partnerships, but would explore new possibilities. .