Tesla Motors has inked a non-binding agreement with a Shanghai government-owned firm to set up a production base in the city, Bloomberg reported, citing a source with knowledge of the matter
The US electric car maker signed a memorandum of understanding with Jinqiao Group for a planned manufacturing facility in Shanghai, according to the report.
Each party may invest about 30 billion yuan (US$4.5 billion) in the partnership, with Jinqiao putting up land for most of its share, the source was quoted as saying.
Besides Shanghai, Suzhou and Hefei are among the cities that are actively seeking to win the investment from Tesla.
But Tesla is said to be opting for Shanghai as the city is one of the major auto manufacturing hubs in China.
Manufacturing in China will allow Tesla to avoid a 25 percent import levy, making its electric vehicles more competitive against foreign luxury-brand rivals as well as local offerings by Chinese firms such as BYD and BAIC Motor, the report noted.
Tesla CEO Elon Musk said earlier this year that the automaker is seeking a Chinese production partner and that the company has held a number of high-level meetings with the government.
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