Tesla says Model 3 plans should reduce China tariffs' impact

Tesla Model 3 sedan is displayed during its launch in Hawthorne Calif

Tesla Model 3 sedan is displayed during its launch in Hawthorne Calif

On Friday, Tesla announced that it is now looking for means to reduce the impact of tariff on its products, specifically its Model 3 sedan, by building more cars in their Shanghai factory.

Tesla said in a filing with the Securities and Exchange Commission: "In China, which is the largest market for electric vehicles in the world, our Model S and Model X sales have been, and will likely continue to be, negatively impacted by recently-increased tariffs imposed by the Chinese government on US -manufactured vehicles".

It is planned to produce about 3 thousand cars Model 3 a week. It also claimed that tariffs, imposed by the Chinese government, had "negatively impacted" the sales of its Model S and Model X vehicles in the country.

Tesla will spend between $2.5 billion and $3 billion in capital expenditures readying the business for increased Model 3 production, development on its next vehicle, the Model Y, the second-generation Roadster and other projects, according to the filing.

Tesla CEO Elon Musk signed a 2-billion-dollar agreement with China's Shanghai government in July this year to build a new auto plant in Shanghai, the financial and economic hub in eastern China.

The filing includes plenty of legal language warning the time frame on its production targets was "subject to a number of uncertainties, including regulatory approval, supply chain constraints, and the pace of bringing the factory online".

With the on-going trade dispute between China and the USA, the firm said that local manufacturing will be critical to its expansion and existing level of sales in China, which it acknowledged as being the largest market for electric vehicles.

More than 28 million vehicles were sold in China in 2017, and the figure could top 35 million annually by 2025.

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