Eyeing China’s Booming EV Market, Tesla To Set Up A Factory In ShanghaiTesla’s factory in Fremont, California (Justin Sullivan/Getty Images)

Elon Musk’s Tesla Motors has reached an agreement with Chinese authorities in Shanghai making it the first foreign automobile manufacturer to build its own plant in China, the Wall Street Journal reported. The plant will be built in the city’s free-trade zone and will be entirely owned by Tesla, reports AFP.

This move comes in as a major change in Chinese policy, which hitherto mandated a local partner for all foreign investments. Tesla, however will still have to pay a 25 per cent import tariff.

Tesla had confirmed in June that talks were on to set up a manufacturing facility in China. A spokesperson had said that while most of the manufacturing capacity will remain in the United States, it would need to “need to establish local factories to ensure affordability for the markets they serve”.

China is currently the largest automobile market in the world, according to The Verge, and with the government’s plans to phase out fuel-powered vehicles, the time seems ripe for Tesla to invest in the Asian country. The decision to phase out fuel-based vehicles follows that of India which announced 2030 as the target year and France and Britain who had announced 2040 as their target to go completely electric.

Also Read: Volvo, Electric Motors And A Dragon Powered By Lithium Ion Batteries

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