Following the series of reports stating that Tesla reached a deal with the Shanghai Municipal Government to build a factory in the region, the company has now confirmed that they are working with the local government to establish a manufacturing facility – without confirming that a deal has been reached, as previously reported.

In a statement, the company makes sure to convey the message that a factory in China would be to support local demand and not exportation. They remain committed to manufacturing in the US.

China is already the biggest market for electric vehicles, or any vehicles for that matter. Tesla profited from the demand and it tripled its sales to over $1 billion in the country in 2016.

They reiterated today that they are “deeply committed to the Chinese market.”

A Tesla spokesperson sent us the following statement:

“Tesla 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 have said before, we expect to more clearly define our plans for production in China by the end of the year. Tesla is deeply committed to the Chinese market, and we continue to evaluate potential manufacturing sites around the globe to serve the local markets. While we expect most of our production to remain in the US, we do need to establish local factories to ensure affordability for the markets they serve.”

While it isn’t confirmed yet, it looks like Shanghai will be among the up to 3 more locations to build Gigafactories to produce both batteries and electric vehicles that Tesla planned to announce before the end of the year.

The previous reports included rumors of deals between Tesla and Shanghai Electric Group or the Shanghai Lingang port. The latter has denied the rumor.

Under the current regulations, Tesla would still need a joint-venture to establish manufacturing capacity in China, but the government has shown interest in relaxing those laws lately. It could potentially be part of their ongoing negotiations.

As previously reported, Tesla CEO Elon Musk met with China’s Vice Premier just over a month ago.

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