Tesla Inc’s (NASDAQ:TSLA) ambitious expansion plans in China are coming under threat, according to reports, as the electric car maker can’t agree a deal to open a factory in the country.
Elon Musk has been trying to reach an agreement with the Chinese government since last summer but has so far been unsuccessful, with Bloomberg reporting that the two sides disagree on the ownership structure for a proposed factory.
At the moment, every foreign automaker must partner with Chinese companies in order to manufacture locally, but Tesla wants to own the factory completely.
If a deal can’t be reached, the US car maker could miss out on the surging demand for electric vehicles as President Xi Jinping’s administration hand out billions of dollars in subsidies to try to entice consumers away from air polluting gas guzzlers.
Tesla currently sells into China but each car is subject to a hefty 25% import tax, taking the sticker price beyond the means of most consumers and allowing cheaper models and domestic rivals to take a foothold in the lucrative market.
Citing people close to the negotiations, Bloomberg said the current stalemate doesn’t mean Tesla won’t strike a deal at some point in the future though.
Tesla declined to comment on its negotiations.
Shares in the car maker were broadly flat in pre-market trade on Wednesday at US$325.
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