Tesla to set up electric-car R&D hub in Beijing

U.S. electric-vehicle maker Tesla will set up an R&D center here as part of a Chinese expansion push that may also include local production.

The automaker established in Beijing a company for research and development of “new energy” vehicles, a government filing shows. The new business, capitalized at $2 million, is wholly owned by a Hong Kong arm of Tesla, according to local media.

Tesla sold an estimated 11,000 vehicles last year in China, its second-biggest market. Its cars are roughly 40% more expensive here than in the U.S., owing partly to a tariff on imported vehicles. Tesla is considering building cars in Shanghai to reduce prices, and it apparently decided that an R&D hub was needed as well in order to tailor its offerings to the Chinese market.

The Beijing location is close to government agencies that handle standards and regulations for new-energy vehicles, in addition to being near the headquarters of a number of major companies.

The Chinese government plans to relax ownership restrictions by June 2018 on joint ventures producing new-energy vehicles, letting foreign companies hold majority stakes in ventures based in free trade zones. The change — announced after U.S. President Donald Trump’s meeting this month with Chinese counterpart Xi Jinping — likely encouraged Tesla to expand its Chinese operations.