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Tesla could open a factory in China to grab a bigger slice of the nation’s EV segment

Tesla is looking into building a factory in China in order to secure a bigger slice of the nation’s hotly contested electric vehicle market, a new report finds.

Company representatives allegedly traveled to Suzhou, a large city located roughly 60 miles from Shanghai, earlier this month to discuss with members of the local government the possibility of opening an assembly plant on the outskirts of town. Details haven’t been made public yet, and a Tesla spokesperson contacted by The Global Times declined to comment on the matter.

Tesla CEO Elon Musk has previously revealed that he plans on opening a factory in mainland China sooner rather than later. Manufacturing cars in Suzhou could tremendously boost Tesla’s Chinese arm by making its all-electric models — notably the long-awaited Model 3 — more affordable there. The California-based firm would be able to circumvent the high tariffs that Chinese authorities slap on imported cars. For the time being, it sounds like the cars built in Tesla’s upcoming Chinese factory will be sold only on the local market.

Setting up shop in China is easier said than done for foreign car makers. After sourcing a suitable plot of land, companies need to find a local manufacturer to form a joint venture with. At this point, it’s too early to tell who Tesla has in mind, and whether or not talks have already begun. Nearly all of China’s largest automakers already operate at least one joint venture with a major American, European, or Japanese company.

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If the rumor is accurate, Tesla will announce more details about its first-ever Chinese factory in the coming months. When we’ll see the first Chinese-built Tesla largely depends on when construction begins, and how long it takes for the plant to become fully operational. In the United States, Model 3 production is scheduled to kick off in 2017, and deliveries will begin before the year draws to a close.