- China is easing a decades-old rule governing auto manufacturing by foreign companies in the country and Tesla could benefit in a big way.
- Electric carmakers will see the rule changed this year.
- That move benefits
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Tesla might have just won a victory in China — but it will be expensive (TSLA)
If the Tesla now wants to do local automaking in China, it will have to absorb most or all the cost of building a plant.
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Since the 1990s, China has required foreign automakers to engage in joint-ventures with Chinese companies in order to sell US-badged vehicles in the Middle Kingdom.
No JV and you pay a 25% import tax. The most prominent, JV-less US automaker that has to pay the tax is Tesla, which has a single assembly plant in California.
China is a big growth market, so this Wall Street Journal report is good news for Tesla: the JV rules will be phased out completely by 2022, and for electric-car manufacturers this year.
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