Tesla seeks to reduce tariff impact for Model 3 by making cars in China

Tesla Inc said on Friday that is developing plans to start producing about 3,000 Model 3 vehicles per week in Shanghai in the initial phase of its Gigafactory 3 to reduce the impact of tariffs.

The company also said in a filing that Model S and Model X sales in China have been, and will likely continue to be, hurt by recently increased tariffs imposed by the Chinese government on U.S.-manufactured vehicles.

The electric carmaker said it continues to push to increase Model 3 production to about 10,000 units per week.

Tesla also expects to continue to increase its Model 3 production rate to about 7,000 units per week at its Fremont, California factory.

China is the largest market for electric vehicles, and most forecasters predict that electric vehicle sales in the country will accelerate rapidly as government regulation drives toward a goal of 100-percent electric vehicles by 2030.