Tesla to build Shanghai factory

US electric vehicle (EV) manufacturer Tesla is to build a production facility in China under an agreement with Shanghai's local government.

Construction is expected to begin imminently, with production starting in approximately two years and the site hitting capacity of 500,000 vehicles/yr in around five years. This is similar to the installed capacity at the company's factory in Fremont, California, although production in the first quarter of this year totalled only 34,494 units.

The Shanghai plant will be the first Tesla manufacturing facility outside the US. The company previously said it would build a battery production plant in Europe, but has yet to select a site.

Developing a facility in China would protect Tesla from some of the effects of the trade dispute between the US and China and position it closer to the world's largest EV market. Beijing recently announced plans to double the country's EV production by 2020, as well as electrifying public transport and rolling out an expanded EV charging network. Early government subsidies and industry support led to a crackdown in March last year on subsidy fraud by manufacturers.