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China gives Tesla green light for production

Now, it's a matter of when manufacturing will start in the country.

Tesla factory in China
Production could start this month.
VCG/Getty Images

Tesla put a major piece in its manufacturing puzzle in China with government approval of automotive production locally. The US-based electric-car maker is now officially part of the approved list of automotive manufacturers in the world's largest auto market.

Reuters first reported on the news after viewing a copy of list the Chinese industry ministry produced. The granting gives Tesla the certification needed to start local production, though it's not clear when that will begin. Tesla did not immediately respond to a request for comment.

The factory will be the first full-scale manufacturing plant outside of the US. Tesla does operate a "final assembly" facility in Tilburg, Netherlands, but the Chinese site is a key pillar in expanding the automaker's footprint in the country. Tesla vehicles are currently subject to auto tariffs; local production will element those taxes. China has also granted the carmaker assistance to expedite construction.

Reuters also reported production at the new factory could kick off this month. 

Tesla will make history in the country when the first vehicles begin rolling off the assembly line in China. Following a 2018 announcement from the government, China will phase out ownership limits on foreign automakers by 2022. It opens up non-domestic automakers to take controlling stakes in their operations. Until now, automakers needed to partner with a local automaker to do business in the country, often capping ownership limits at 50%. Tesla will operate the first completely foreign owned facility.

The sunset period for ownership caps favors what China calls "new-energy vehicles" and the government lifted limits for on foreign-invested shares for hybrid and electric cars last year. In 2020, the cap will end for commercial vehicles, and in 2022, all non-domestic automakers will be free to grab a larger stake in their operations.

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