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Tesla may be closer to a Shanghai factory in light of Chinese policy change

The Verge says relaxed regulations may be good news for the electric-car maker in China

Tesla chargers
The electric-car maker would be exempt from a 25% import tax

The Chinese government’s announcement that it will be easing regulations on foreign auto-makers may be good news for Tesla Inc, according to a report by The Verge.

Previously, foreign automakers in China were not allowed to own more than 50% of its manufacturing and as a result had to share profits and trade expertise by way of joint-ventures with Chinese manufacturers.

Some companies, like General Motors (NYSE:GM) and Ford (NYSE:F), have maneuvered around the strict policy by taking on a partner in China. Tesla has been hesitant to do the same.

READ: Tesla the 'ultimate high-risk name in autos' says Morgan Stanley analyst, pointing to Model 3 production

The electric-car maker made a deal with the Chinese government in October 2017, as per a Wall Street Journal report, to establish and fully own a manufacturing facility in Shanghai, exempting the company from the 25% import tax.

In light of the policy change, the automaker may now be able to drive solo. Cowen analysts debated whether Tesla is ready to do that.

“Investors that we speak with aren’t necessarily jumping up and down,” Cowen analyst Jeffrey Osborne told the Verge. “If you can’t finish the Model 3 domestically, then the long-term roadmap isn’t really there.”

Shares of Tesla fell slightyl to US$292.06 in morning trading.

Quick facts: Tesla Inc

Price: 480.01 USD

Market: NASDAQ
Market Cap: $88.51 billion

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