Tesla CEO Elon Musk has confirmed that his company is in the middle of negotiations with the Chinese government on the possibility of manufacturing its cars in the country. Without jumping into specific details of the negotiations, Musk hinted that if the Chinese government gives the thumbs up on allowing a manufacturing plant in the country, prices of its models could potentially drop by around 33 percent.

The California-based automaker is determined to gain a stronger hold in the Chinese market, knowing full well the benefits of being a player in the country. So far, sales of Tesla models in China have been tepid at best and Musk is determined to increase that number. From January to September 2015, Tesla has sold just 3,025 units of the Model S in China, and while that may be an admirable number in another country, that’s far from what can be characterized as decent volume in a country China’s size.

Having a manufacturing facility in China could open that sales floodgate for the company. But getting there will take a lot of work, and in the Chinese government’s case, a lot of convincing. One potential roadblock is the government’s requirement for a foreign automaker to establish a joint venture with a Chinese company just so the automaker can build cars in the country. So far, Musk hasn’t said anything pertaining to progress on its negotiations with the government.

It is imperative that Tesla boosts its sales in China considering the massive investments it has made in other divisions, particularly its $5 billion battery factory in Nevada. Without the strength of the Chinese market to boost its volume, Tesla has already been forced to slash off roughly 30 percent of its 600 employees in the U.S. It’s not a given that a Chinese plant will reverse its sales fortune in China, but at the very least, it’s going to help drive up production, and just as important, brand recognition among Chinese customers.

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