Apparently contradicting the speculation in United States media reports, however, Chinese news outlet Sina claims Tesla's Shanghai entity is focused on import/export and technology development instead of vehicle manufacturing.
A representative for Tesla China wasn't able to comment immediately.
According to the news report by Reuters, in anticipation of China scrapping its rules with regard to foreign companies owning new-energy vehicle (NEV) firms, Tesla has registered a new electric vehicle company in Shanghai.
U.S. media reports have speculated the Shanghai registration is a response to China's willingness to ease its foreign ownership restrictions for automotive factories.
The company already operates under Tesla Motors Hong Kong Co.
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Tesla refused to build a factory in China unless the regulations were eased to allow full control of factories by foreign owners. Chinese authorities recently announced that they would be removing limits on foreign companies' ownership of ventures such as the NEV starting this year. Musk has also eluded in the past that the company will produce the Model 3 and Model Y in China, while the more expensive Model S and Model X aren't likely to see Chinese production.
China has said it will scrap limits on foreign ownership of NEV ventures this year and all automotive ventures by 2022, a major policy shift in the world's top vehicle market that has capped foreign ownership at 50 percent for over two decades.
The move came after Tesla founder and CEO Elon Musk said earlier this month that it plans to announce the location of a "gigafactory" in China as early as the third quarter of this year.
Tesla has long eyed manufacturing its cars in China, the world's biggest electric market. Of this amount, about $2 billion of the revenue was contributed by the Chinese market.