While electric car company Tesla is still working on meeting its production goals for the recently introduced Model 3 in the U.S. market, the company has made a move to expand its production capabilities and build a factory in China, the world's biggest electric vehicle market.
The company has reportedly reached an agreement with the Chinese government to construct a production facility in the free-trade zone located in Shanghai. Although Tesla has not released an official statement regarding the deal, this move will offer a huge boost in the production of Tesla's cars and will likely dramatically lower the cost of its vehicles being sold in the Chinese market.
Thanks to the country's humongous market for electric vehicles, Elon Musk's company has been eyeing its own Chinese factory for years. Earlier this year, Chinese technology titan Tencent Holdings made a sizable investment in Tesla, a partnership that may help the American company achieve a substantial influence in the Asian market.
In 2016, Tesla sold over $1 billion worth of cars in China. That is an impressive number, although it should be noted that Tesla cars cost around 50 percent more in China due to import fees. Musk has said in 2015 that having factory in China will most likely reduce the price sold there by a third.
China is looking to phase out gas-powered vehicles from the market and is working on a timetable to end all production of vehicles that use fossil fuels. Due to this, the country is the largest single market making a push for electric vehicles.
This decision follows many other developed countries' dedication to end fossil fuel consumption in their vehicle fleet. Norway has set an ambitious 2025 goal for total electrification. India is looking to do it by 2030, while France and U.K. are eyeing a target year of 2040.
