Tesla reaffirmed on Sunday that it is in discussions with the Shanghai municipal government to set up an electric-car factory in the region.
The US-based company said it expects to agree on a plan by the end of the year, Reuters reports.
China levies a 25 percent duty on sales of imported vehicles and has not allowed foreign automakers to establish wholly-owned factories in the country.
Those are problems for Tesla, which wants to expand its presence in China’s growing electric vehicle market without compromising its independence or intellectual property, Reuters noted.
However, Beijing has considered allowing foreign automakers to set up wholly-owned factories in free-trade zones, in part to encourage more production of electric and hybrid automobiles.
Tesla will have to pay a 25 percent duty on cars built in a free-trade zone, but the firm can still enjoy lower production costs.
Tesla on Sunday pointed to a statement it made in June that the company “is working with the Shanghai Municipal Government to explore the possibility of establishing a manufacturing facility in the region to serve the Chinese market.”
“As we’ve said before, we expect to more clearly define our plans for production in China by the end of the year.”
The Wall Street Journal reported earlier that Tesla and the Shanghai government have reached a deal for a facility in the city’s free-trade zone.
The company declined to comment on the report, Reuters said.
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