American electric carmaker Tesla Motors reportedly wants to put its first Chinese production plant in the city of Shanghai.
According to sources, the company is in talks with Jinqiao Group, a government-owned company based in the city, for the construction of its first factory in the country. The two parties have reportedly already signed a non-binding memorandum of understanding for the project.
The two companies will reportedly invest around 30 billion yuan ($4.5 billion) each for the project, with a large portion of Jinqiao's share coming in the form of land. The total investment would be larger than that of Walt Disney for the construction of the Shanghai Disneyland.
However, Jinquiao subsidiary Shanghai Jinqiao Export Processing Zone Development Co. clarified that they have yet to formally sign documents concerning the project, Bloomberg reported.
Tesla refused to comment on the reports.
Experts said that the deal, if it pushes through, is going to be a major triumph for Tesla, Jinqiao, and the city of Shanghai as a whole. According to auto industry analyst Steve Man, the partnership will help avoid the 25 percent tax being levied on foreign companies importing vehicles since the vehicles will now be manufactured domestically.
Under Chinese laws, a foreign automaker wishing to set up its own manufacturing facility in the country is required to partner with a Chinese company first to be allowed to do so. Ford, Hyundai and Nissan are some of the foreign manufacturers that have gone this route to establish their Chinese production centers.
Meanwhile, analyst Zhang Yu of Shanghai-based Automotive Foresight said that the city should definitely welcome Tesla as it will not only bring economic development, but also support the government's push to further promote the use of new energy vehicles, the South China Morning Post reported.
Aside from Shanghai, the cities of Suzhou and Hefei also reportedly vied for the project.