Called Tesla (Shanghai) Co Ltd, the firm will focus on electric cars, spare parts and batteries, as well as the development of photovoltaic products. The wholly owned subsidiary of Tesla US got its business license from Pundong New Area's market regulation bureau.
Tesla appears one step closer to announcing a new factory in China.
AFP reported that Tesla has set up a company in Shanghai focusing on technology development in China, a crucial market for the U.S. firm as the country plans to scrap ownership limits for foreign automakers.
The Street reports that the electric automaker recently established Tesla Shanghai Co. Zhu Xiaotong, who is the head of Tesla's Chinese operations, is listed as the new firm's legal representative, with Tesla Motors HK Limited given as its only shareholder.
Tesla now imports all the cars it sells in China from the United States.
Tesla is preparing to set foot on Chinese soil as the country begins lifting a cap on foreign ownership of domestic auto ventures.
The potential liberalisations were believed to pave the way for global companies such as Tesla to set up their own production bases in the world's largest auto market. In fact, it looked like Elon Musk's gamble on China was going to fail.
Tesla has been in protracted negotiations to set up its own plant in Shanghai to produce vehicles locally, gaining access to China's rapidly growing market for electric vehicles while avoiding high import tariffs. The Shanghai Municipal Commission of Economy and Information Technology also stated that the Chinese government and Tesla had kept communication channels open and would continue to discuss Tesla's plan in their municipality.
Tesla was in talks with the Shanghai municipal government on building a factory at Lingang New City previous year, but the negotiations did not come to fruition due to differences on the ownership structure.