Tesla halts purchase of Shanghai land over US-China tensions

US electric car maker Tesla halted plans to buy land in Shanghai to expand its plant and turn it into a global export hub due to the ongoing geopolitical tensions.

In March, the US carmaker refrained from bidding for a plot of land near its existing site as it was no longer interested in boosting its Chinese production capacity.

Although Tesla had never officially declared an intention to acquire the land in the first place, construction documents posted on a government website at the time revealed that Tesla was revamping the plant to add production capacity.

According to people familiar with the matter who spoke to Reuters, the existing 25% tariffs on vehicles imported from China, which were imposed on top of the existing levies, had led the US carmaker to consider limiting production in China.

Tesla had earlier considered expanding exports of its China-made entry-level Model 3 to more markets, including the United States, sources told Reuters.

At the moment, the Shanghai factory produces Model 3s and Model Ys at a rate of 450,000 units per year but it was designed to produce up to 500,000. If the company had gone ahead with the land purchase, it would have lifted annual capacity by another 200,000 to 300,000 cars.

Nevertheless, in a statement to Reuters, Tesla said its Shanghai factory was "developing as planned".