Rumors of acquiring other car companies' production lines and building a second factory in China are popping up amid severe capacity constraints.

(Image credit: CnEVPost)

Tesla (NASDAQ: TSLA) has been rumored to have acquired bankrupt Chinese carmaker Zotye Auto as demand far outstrips capacity, but this has been denied by the electric vehicle (EV) maker's executive.

A recently circulated document involving Tesla is not true, and the signature and stamp were forged, which is a suspected crime, Grace Tao, Tesla's global vice president, said on Weibo today.

The document shared by Tao, dated February 18, shows that Zotye promised market regulators in Zhejiang province that it would promptly complete the needed approval processes after obtaining a business license.

The document is signed by Zhu Xiaotong and bears the seal of Tesla Shanghai. Zhu is Tesla's global vice president and president of the Greater China region.

Tao said that Tesla would report the case to the public security authorities and called on Internet users to resist false online rumors.

Tao did not directly mention Zotye in her initial Weibo post, although documents she said untrue showed Tesla was communicating with regulators on Zotye's behalf.

A user then posted a comment saying that Tesla was widely rumored to have acquired Zotye and could she clarify. Tao responded that this was blatantly false.

Zotye was once one of the most successful in China's low-cost car market, with sales reaching 30,000 units in 2008.

After that, the car company had made its sales go further by copying the looks of well-known models, including the Porsche Macan. However, it was eventually abandoned by consumers due to frequent quality problems caused by the lack of technologies.

In August 2017, Ford and Zotye announced the signing of a memorandum of cooperation to form a joint venture for the production of pure electric passenger cars in Zhejiang, with each side holding a 50:50 stake.

In 2019, Zotye's debt problems erupted and at one point it stopped paying its employees. On December 23, 2020, Zotye issued an announcement that it was ordered by a court to terminate its restructuring process and was declared bankrupt.

In early February 2021, Ford China reportedly decided to terminate two previous contracts for a joint venture signed with Zotye in 2017 and 2018, respectively.

Back to Tesla, while the selling price of its vehicles in China has continued to rise over the past year, demand has continued to grow, leading to increasingly long delivery lead times.

Rumors of Tesla acquiring other car companies' production lines in China and building a second factory have surfaced several times at a time when it is severely constrained by capacity.

Last November, there were rumors that Tesla would build its second Gigafactory in China in Qingdao, but this was denied.

An article posted a month ago by the Liaoning provincial government's official WeChat account sparked speculation that Tesla would build a second factory in its provincial capital city of Shenyang. This was subsequently denied by Tesla and the post was deleted.

Local media Cailian later cited sources familiar with the matter as saying that the Shenyang municipal government and Tesla did have contact, but that the new Tesla factory was not confirmed to be located in Shenyang.

"This year, Tesla will start the site selection process for the new factory, which will be determined in 2023," the source said.