Tesla has finalized plans for a factory in Shanghai that would have capacity for 500,000 vehicles a year, according to a Bloomberg report.
A deal to produce Teslas in China has been in the works for some time, as the automaker has been trying to work out details with Shanghai’s municipal government. Those conversations were in play back in October. Chief Executive Elon Musk has said he hopes to begin producing cars in the country in 2020.
Bloomberg reported that Musk would be in the city for an event with the government on Tuesday. Reuters reported that Musk attended a signing held at Shanghai’s Fairmont Peace Hotel.
The Shanghai municipal government said in a statement that it will chip in on capital costs – in fact “fully support the construction of the Tesla factory,” according to the Reuters report.
Tesla plans to produce the first cars about two years after construction begins on its Shanghai factory, ramping up to as many as 500,000 vehicles a year about two to three years after that, Reuters reported.
Tesla is looking to increase production, while also more efficiently reaching global markets. The company currently operates its only car-assembly plant in Fremont, Calif., and a giant battery factory in Nevada. The company has said a European plant will follow the China plant and could be announced by the end of the year.
The importance of a factory in China has grown as trade talks between the U.S. and China have complicated. In response to tariffs imposed by the U.S., China last week increased the import duty on U.S.-made cars to 40 percent, prompting Tesla to raise prices in a large and competitive market for electric cars. A plant in-country would enable the automaker to avoid passing those taxes on to customers.