Tesla Plans to Invest $5 billion in China in Move to Avoid Tariffs

Aug 01, 2018

Tesla (NASDAQ:TSLA) plans to invest $5 billion to produce cars in China and avoid possible tariffs as trade tensions between the U.S. and Beijing remain on edge, according to a report from Bloomberg.

The company is looking to raise funds in China to finance at least a portion of the investment for the plant, one source told Bloomberg.

According to the report, Tesla will begin producing its new Model 3 vehicle at the factory near Shanghai in 2020.

Last month, chief executive officer Elon Musk made an agreement with Chinese authorities to build a new its first factory outside the U.S. and the move was expected to double the size of the electric car maker’s global manufacturing.

The agreement was reached not long after Tesla raised prices on U.S.-made vehicles it sells in China in order to offset the cost of new tariffs imposed by Beijing in retaliation for President Donald Trump’s heavier levies on Chinese goods.

The news comes on the back of a Wall Street Journal report that said Monday that Tesla was also in talks with authorities in Germany and the Netherlands to build its first major European Gigafactory, designed to build cars and batteries in the same place.

The reported price tag hits the wires as Tesla prepares to report second quarter earnings after Wednesday’s market close.

Consensus is looking for a quarterly loss of $2.78 per share on revenue of $4.03 billion.

Analysts will also be paying close attention to see if Tesla is shipping more than 5,000 Model 3 units per week.