Tesla’s plans to purchase Shanghai land disrupted by US-China tensions

American automaker Tesla has halted plans to purchase land to expand its Shanghai plant and make it a global export hub, people knowledgeable with the matter said, because of uncertainty created by tensions between the U.S. and China.

With 25% tariffs on imported Chinese electric vehicles imposed on top of current levies under former U.S. President Donald Trump still in place, the automaker now intends to limit the proportion of China output in its worldwide production, according to Reuters.

Tesla had earlier thought about expanding exports of its China-made entry-level Model 3 to more markets, including the United States.

Tesla presently ships China-made Model 3s to Europe, where it is constructing a factory in Germany.

Tesla sold 25,845 China-made vehicles in China and overseas in April, declining from 35,478 in March, according to data from China Passenger Car Association (CPCA).

Tesla’s Shanghai factory is set to produce up to 500,000 cars annually and has the capacity to produce Model 3 and Model Y vehicles at a rate of 450,000 total units every year.

Tesla had never declared an intention to purchase the land, which is about half the size of the 200-acre (80 hectare) plot housing Tesla’s current facility and would allow the automaker to lift capacity by another 200,000 to 300,000 cars.