Why don't we just take the factory, and push it somewhere else?
The United States has entered a trade war with China after imposing a 25% tariff on $34 billion worth Chinese goods. China has already reciprocated with tariffs of its own, and companies like Tesla are already feeling the burn. Tesla has had no choice but to increase the price of its cars in China, but Automotive News reports that CEO Elon Musk already has plans to get around the tariffs. Since it looks like the US and China aren't backing down, Tesla has announced a new factory in Shanghai.
Musk met with Chinese officials this week, and Shanghai will speed up efforts to cancel restrictions on foreign investment in the country. In the past, automakers that wanted to build in China needed to do so with a Chinese partner. Earlier this year, the Chinese government said it would ditch these restrictions for automakers building electric vehicles and plug-in hybrids. After hearing that Tesla wants to invest in China, Huang Ou, deputy director of the Shanghai Commission of Economy and Information Technology, told the press that the city government would prepare to support the Tesla project. This will be the largest foreign investment project in Shanghai.
Tesla hasn't announced when construction of the plant will begin, but is aiming for a production capacity of 500,000 cars per year. Building cars in China will help Tesla avoid the massive 25% tariffs that is currently being imposed on US-built vehicles in China. If Trump's goal was to get automakers to build more cars in the US, then this move by Tesla will certainly turn a few heads in the White House.