2017.10.2221:06:00UTC+00Tesla Reportedly Strikes Deal to Open Shanghai Facility

Citing people familiar with the matter, Wall Street Journal reported on Sunday that Tesla Inc. has reached a deal with the Shanghai government to set up its own factory in the city.

The electric carmaker is working with the local government regarding the timing and details of the announcement, sources told the newspaper. The agreement, which without a domestic partner likely won't remove China's 25 percent import tax, will still enable Tesla to lower its production cost significantly, the report said.

In June, the automaker confirmed it was cooperating with the Shanghai government to explore the possibility of establishing a manufacturing facility in China after Bloomberg reported that Tesla was near a preliminary deal to producer vehicles in the country for the first time. The firm led by Elon Musk said that during that time, it had planned to outline its plan more clearly by the end of the year.

Last month, it was reported by Bloomberg that China was in talks regarding a plan to enable foreign automakers to open wholly owned electric car businesses in its free-trade zones. Such move would be a major change of a fundamental principle that dictates the country's auto industry that barrs car firms from setting up operations in China without a local JV.