Electric-car giant Tesla Inc. is planning to build a factory in China, marking a major effort by the company to expand production abroad.
The government of Shanghai said the factory will have a planned capacity of 500,000 vehicles per year, rivaling the company’s production capacity at its lone U.S. factory, in Fremont, Calif.
Bloomberg previously reported that Elon Musk, the company’s CEO, was expected to travel to Shanghai for an event with the government on Tuesday.
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The company previously signaled that after its expansion in China it could broaden its overseas presence with a factory in Europe.
A Tesla spokesperson said Tuesday that the company expects construction to begin in the “near future” and would begin manufacturing cars in roughly two years.
From there, the spokesperson said, it is expected to take another two to three years before the factory ramps up production to full capacity.
The spokesperson said the expansion to China would not affect its operations in the U.S.
The electric-carmaker’s planned expansion to China, the world’s largest electric car market, comes as Washington and Beijing are fighting over trade. China responded to U.S. tariffs last week by raising duties on auto imports from the U.S. to 40 percent.
That prompted Tesla to raise the prices of its vehicles in China by as much as $30,000, according to Bloomberg.
At the same time, U.S. motorcycle manufacturer Harley-Davidson has announced plans to shift some production overseas in response to retaliatory tariffs from the European Union, which were announced after the Trump administration imposed steep duties on steel and aluminum imports.
Updated at 10:24 a.m.