Electric car manufacturer Tesla Inc. has reached an agreement with the Shanghai Government to build a production facility in the city’s ‘free trade zone’, potentially giving the car maker an opportunity to drastically cut down its production costs. The details of this agreement emerge amidst a major slowdown in the production of the Company’s latest offering, the Tesla Model 3.
China’s earlier proposal allowed electric car manufacturers into the country without the requirement of local partners if they would set up their facility in the ‘free trade zones’. Specific details of the agreement between Tesla and the Shanghai Government are in the process of being worked out.
‘Free trade zones’ provide a host of incentives to companies setting up their industries there. These incentives include gaining the status of a ‘genuine mainland Chinese company, duty free warehousing, significantly lower tax rates, access to WeChat Business Account, etc.
China’s electric vehicle market is the world’s largest and is set to grow further as the country plans to migrate from gasoline vehicles in a bid to tackle pollution and improve the environment.
Relevant Links :
The Wall Street Journal
Fortune
This post was authored by Ravi Shankar from West Bengal National University of Juridical Sciences.
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