Tesla Inc. is having difficulty convincing the Chinese government to allow it to open a car assembly factory in the country, complicating its entry into one of the largest electric vehicle markets in the world, Bloomberg News said citing people familiar with the matter.
The luxury car maker has yet to strike an agreement with city officials in Shanghai for a local manufacturing facility. The main stumbling block to clinching the deal is the Chinese' government's insistence that Tesla enter into a joint venture with a local partner. Under current law, foreign car makers must partner with Chinese companies in order to manufacture locally. Tesla said that it wants to completely own the production facility, Bloomberg News said citing its source.
Tesla's inability to start local manufacturing operations means that it is missing out on an opportunity to capitalize on China's hard sell for new energy vehicles. Beijing has subsidized programs to entice consumers away from high-fuel consumption cars in a bid to eradicate air pollution and reduce local dependence on oil.
China's commerce ministry and the Shanghai economic commission declined to comment on the matter. The automaker also did not comment on its negotiations with the Chinese government though its CEO, Elon Musk, told investors in November 2017 that it is three years away from opening production in the country, Bloomberg News said.