Electric-car maker Tesla Inc. has confirmed it has launched talks with Shanghai's local government to establish a manufacturing plant in the city.
The company expects to receive an approval for this project by the end of this year. Tesla wants to expand in China to tap the government-encouraged growing demand for electric cars.
The Chinese government imposes a 25 percent tariff on imported cars, a percentage that Tesla is trying to avoid, and to reducing production costs by manufacturing its cars in China, as well.
The company did not confirm a Wall Street Journal report saying that the Tesla-Shanghai agreement had already been signed and the plant would be located in the city's free zone.
Tesla is suffering from production pressures in its sole plant in California, especially in the production of Model 3, which has reached 260 cars, instead of 1,500 cars as planned by the company.