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Tesla cars built in China have been recommended for government subsidies, report says

Elon Musk attends the groundbreaking ceremony of the Tesla Gigafactory in Shanghai, east China, on January 7, 2019.

Ding Ting | Xinhua News Agency | Getty Images

China’s industry ministry has put Tesla Model 3 cars that are built inside the country on a list of vehicles recommended for government subsidies, according to a Reuters report on Friday.

Reuters, citing a document published by the Ministry of Industry and Information Technology, said the level of subsidy that Tesla would receive was not yet clear. Two types of the Model 3 were on the recommendation list for new energy vehicle subsidies, it said.

Tesla shares rose 1.5% in extended hours trade on the back of the news.

The Chinese city of Shanghai is home to Tesla’s Gigafactory 3, where groundbreaking on the facility took place in January 2019. In its third-quarter update toward the end of October, Tesla said trial production of the Model 3 in Shanghai had started ahead of schedule.

Elon Musk’s firm noted that the Chinese facility was, in terms of capital expenditure per unit of capacity, approximately 65% less expensive to construct than its U.S.-based Model 3 production system.

Worldwide electric car sales hit 1.98 million in 2018, according to the International Energy Agency (IEA), with global stock reaching 5.12 million.

China’s electric car market is the biggest on the planet — a little over 1 million electric cars were sold there last year — the IEA says, with Europe and the U.S. following behind.

Tesla is one of several automotive firms attempting to make inroads into the Chinese market.

Just last week, the BMW Group, together with China’s Great Wall Motor, announced it would construct a plant to produce fully-electric models of the Mini car brand.

The facility’s construction phase is slated to take place between 2020 and 2022, and it will be located in the city of Zhangjiagang, Jiangsu Province, the BMW Group said last week.

The two firms have set up a joint venture called Spotlight Automotive Limited and the combined investment in the plant will amount to approximately 650 million euros ($721 million).

Once up and running, the factory line will have the capacity to produce as many as 160,000 vehicles annually.

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