Tesla’s expansion plans in China put on hold due to US tariffs

US electric car producer Tesla has reportedly held off on plans to buy land to expand its plant in the Chinese province of Shanghai and turn it into the company’s global export hub, as uncertainty over US-China relations grows.

Tesla refrained from bidding on a plot of land that is in close quarters to its factory, according to unnamed sources familiar with the matter, as quoted by Reuters.

With an annual capacity of up to 500,000 vehicles, the company’s Shanghai plant is currently manufacturing Model 3 and Model Y vehicles at a rate of 450,000 units per year.

Earlier, the automaker was reportedly planning to increase the capacity of the existing production lines to expand exports of its China-made Model 3 to more markets, including the US, according to sources. The company currently ships China-made Model 3s to Europe.

However, with 25% tariffs on imported Chinese electric cars imposed, on top of existing levies introduced under former US President Donald Trump still in place, the automaker is planning to put limits on the share of China output in its global production.

Tesla’s sales in China, where the company managed to generate $3 billion in revenue in the first three months of 2021 alone, are growing, despite constant regulatory pressure in the country.

The automaker faces intense scrutiny in China over safety and customer-service concerns about vehicle cameras, battery fires, unexpected acceleration and failures in over-the-air software updates. Moreover, Tesla is also under close attention from Chinese watchdogs over how the company handles data.

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