Bloomberg's Monday report that a Shanghai government-owned company signed a non-binding memorandum of understanding with electric-car maker Tesla Motors (TSLA 4.96%) for a significant plan to build production facilities in the country was shot down on Tuesday.
Tesla Fremont Factory. Image source: Tesla Motors.
"Shanghai Jinqiao Export Processing Zone Development Co said its parent company Jinqiao Group had not signed an agreement of any kind with the U.S. automaker," Reuters said on Monday in response to the speculation. The deal, if it were true, would have been substantial. Each party could invest about $4.5 billion in the joint venture, Bloomberg reported, citing "a person with knowledge of the matter."
The Reuters report did say, however, that a Tesla spokesperson confirmed the company "was talking to various parties about local production but declined to elaborate."
Does it matter?
At this point, China factory rumors should be treated as useless market noise. Tesla has already indicated the company plans to build a factory in China for local production as early as next year, so even believable speculation from reputable sources doesn't impact an investment thesis in Tesla.
An official announcement from Tesla about plans for a factory in China, however, might be news worth considering. Until an official announcement is made, though, investors would do just fine ignoring speculation about a Tesla factory in China.
It's true that Tesla's production is constrained, and the beginning of its first deliveries of Model 3 next year will likely only magnify this problem. A factory in China, therefore, could make sense.
