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Tesla moves closer to deal to build cars in China

From Reuters - October 22, 2017

(Reuters) - Electric car maker Tesla Inc (TSLA.O) said on Sunday it is talking with the Shanghai municipal government to set up a factory in the region and expects to agree on a plan by the end of the year.

China levies a 25 percent duty on sales of imported vehicles and has not allowed foreign automakers to establish wholly owned factories in the country, the worlds largest automaker. Those are problems for Tesla, which wants to expand its presence in Chinas growing electric vehicle market without compromising its independence or intellectual property.

Chinas government has considered allowing foreign automakers to set up wholly owned factories in free trade zones in part to encourage more production of electric and hybrid vehicles - which the government calls new energy vehicles - to meet ambitious sales quotas.

Tesla would still have to pay a 25 percent duty on cars built in a free trade zone, but it could lower its production costs.

Tesla is working with the Shanghai Municipal Government to explore the possibility of establishing a manufacturing facility in the region to serve the Chinese market. As weve said before, we expect to more clearly define our plans for production in China by the end of the year, a Tesla spokesperson said in a statement emailed to Reuters.

Tesla said in June it was beginning talks with Shanghai.

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