Tesla in talks with municipal government of Shanghai to manufacture vehicles in the city.

Tesla yesterday confirmed that it was ''in talks'' with the municipal government of Shanghai to manufacture its vehicles in the country.

Tesla said in a 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've 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.''

The announcement comes after more than a year of speculation over the electric-vehicle maker's China entry. According to commentators, the move also confirmed that Tesla was altering its China strategy away from merely exporting vehicles in order to reach more Chinese consumers.

Musk had visited China earlier this years to discuss Tesla's plans with Wang Yang, one of the nation's highest-ranking officials, to discuss Tesla's plans.

Tesla had been selling vehicles in China since 2014, but its share of the electric vehicle market had remained marginal, at just 2 per cent as of June 2016, according to trade blog CleanTechnica.