"Tesla's new company in Shanghai is a clear message that it will definitely land in the Chinese market for local production", said Davis Zhang, a senior executive at Suzhou Hazardtex, a fork-lift manufacturer.
Tesla received the business license for its subsidiary from the market regulation bureau of the Pudong New Area on Thursday, Xinhua quoted the National Enterprise Credit Information Publicity System as saying on Monday.
Tesla now imports all the electric vehicles it sells in China from the United States.
The new company, Tesla (Shanghai) Co Ltd, was set up with 100 million yuan (around £11.6 million), and will focus on "technical development; technical services; technical consultation; technology transfer in the field of electric vehicles, spare parts, batteries, and energy storage equipment; electric auto display; and product promotion", according to Sina Finance.
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 Palo Alto, California-based company has been working with Shanghai's government since a year ago to explore assembling cars in China.
Tesla may have taken a small step forward in its plan to build a factory in China. CEO Elon Musk has been publicly lobbying China to allow wholly-owned foreign automakers to operate in the country, an ask the Chinese government recently granted.
China, which is the world's largest new-energy vehicle market, had 1.53 million new-energy cars in 2017, accounting for 0.7 per cent of the total vehicles nationwide, according to the Ministry of Public Security.
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