Tesla has reached an agreement with the Shanghai government to build the company’s much-anticipated Chinese Gigafactory. And none too soon – last week, in response to new US tariffs, China increased the import duty on American-made cars to 40 percent, forcing Tesla to raise prices by as much as $30,000.

“We expect construction to begin in the near future after we get all the necessary approvals and permits,” a Tesla spokesperson told Electrek. “From there, it will take roughly two years until we start producing vehicles and then another two to three years before the factory is fully ramped up to produce around 500,000 vehicles per year for Chinese customers.”

The Chinese market for “new energy vehicles” reached 777,000 units last year and could surpass a million this year, according to estimates by the China Association of Automobile Manufacturers. The government’s target is 7 million vehicles a year by 2025.

Tesla sold 14,779 vehicles in China last year, according to LMC Automotive, giving it around 3 percent of the nation’s pure EV market, ahead of other foreign automakers but behind several local brands. China accounted for 17 percent of Tesla’s revenue in 2017.

Source: Bloomberg