Tesla's Shanghai plant may be first wholly-owned facility in China

Tesla has reached an agreement with authorities in Shanghai to set up a wholly-owned plant in China, making it the first foreign automaker to be permitted to do so.

According to The Wall Street Journal , the agreement puts the automaker in the driver's seat in the world's biggest electric-vehicle market.

According to the paper, the Silicon Valley electric carmaker's wholly-owned manufacturing facility would be built in Shanghai's free-trade zone, citing unnamed sources with knowledge of the deal.

According to commentators, the move will allow Tesla to dramatically lower the cost of Tesla cars in China.

Foreign companies are usually required to set up joint ventures with local Chinese partners, which involves splitting profits and giving away some technology, though it avoids import tariffs.

According to commentators, China's electric-vehicle market is already the world's largest and is likely to grow fast, especially as the government planned to require that all automakers' sales include a certain percentage of electric vehicles from 2019.

China is also considering plans to ban cars using fossil-fuels at an unspecified date, following the lead by France and the UK, which have decided to outlaw the sale of such vehicles from 2040 to limit emissions.

No time frame has been revealed for the Tesla facility.

Tesla had said in June that it was in discussions with the Shanghai government and that it would detail its China manufacturing plans by the end of the year.

According to commentators, China levied a 25-per cent duty on sales of imported vehicles and has not allowed foreign automakers to establish wholly owned factories in the country, the world's largest auto market. They point out that these posed problems for Tesla, which is looking to expand its presence in China's growing electric vehicle market without compromising its independence or intellectual property.

According to commentators, it was not clear whether the Chinese government would conclude a deal with Tesla to coincide with US president Donald Trump's visit next month.