Chinese officials and auto executives have been working on a proposal to weaken rules that have forbidden foreign automakers from building in the country without a Chinese partner but still have to pay a 25% import tariff. Many automakers have been hesitant on building in China since they fear that the partnership would compromise their intellectual property.
Tesla, Inc. (NASDAQ: TSLA) announced that they were interested in building a manufacturing facility near Shanghai to enter the Chinese market. The company expects most of their production to remain the U.S. but is looking to launch local factories to keep their car prices affordable.
In March, a Chinese internet giant called Tencent acquired a 5% stake in Tesla starting off the company’s position in the world’s most populous country. China is the word’s largest auto market and Tesla’s sales in that country has already more than tripled since last year which accounted for 14% of the company’s total revenue.