Auto-parts suppliers shares jumped in Asian trading after the Wall Street Journal (WSJ) reported that Tesla Inc reached an agreement with Shanghai’s government to build a fully owned manufacturing facility in the city’s free-trade zone.
“As far as I know, there is no such agreement,” Guo Lei, an official at Shanghai’s Economy and Information Technology Commission who is in charge of new-energy vehicle projects, said in a telephone interview yesterday.
In a statement, Palo Alto, California-based Tesla reiterated that it is working with Shanghai’s government to explore local manufacturing.
Photo: AFP
Tesla signed a preliminary agreement with local authorities to produce cars in the city, a move that would help lower manufacturing and shipping costs, people familiar with the matter told Bloomberg News in June.
Two of those people said they were not aware of any material change when they were contacted yesterday about the Wall Street Journal report.
Tesla’s production plans in the world’s largest auto market are closely followed by industry watchers and investors as China accelerates electric-car development and works on a timeframe to phase out conventional-engine cars.
People familiar with the matter last month told Bloomberg that Chinese authorities are considering a proposal to allow overseas automakers to set up wholly owned electric-vehicle factories in free-trade zones, a move that would give Tesla a greater range of options.
Rules require foreign automakers to have joint ventures with local companies for domestic production.
Cheng Uei Precision Industry Co (正崴) advanced in Taipei trading yesterday.
In Shanghai trading, Ningbo Xusheng Auto Technology Co (寧波旭昇) led gains among suppliers, surging by the 10 percent daily limit.
Tianjin Motor Dies Co (天津汽車模具) rose as much as 7.3 percent in Shenzhen.
Beijing Zhong Ke San Huan High-Tech Co (北京中科三環) and metals supplier Dongguan Eontec Co (東莞宜安) also rose.
“We expect to more clearly define our plans for production in China by the end of the year,” Tesla said in a statement via WeChat.
“We continue to evaluate potential manufacturing sites around the globe to serve the local markets. While we expect most of our production to remain in the US, we do need to establish local factories to ensure affordability for the markets they serve,” it said.
Local production would make it easier for Tesla to access China’s auto-parts supply network and engineering talent pool at lower costs, accelerating sales growth and helping it compete with BYD Co (比亞迪) — China’s largest maker of electric cars — for market dominance, according to Bloomberg Intelligence.
The Chinese government has identified new-energy vehicles as a strategic emerging industry and aims to boost annual sales of plug-in hybrids and fully electric cars 10-fold in the next decade.
Last month, the Chinese government unveiled a set of emission rules, requiring almost all automakers to manufacture zero and low-emission vehicles starting in 2019.
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