Tesla has opened a tender process to build its Shanghai Gigafactory and at least one contractor has started buying materials, according to sources and documents reviewed by the Reuters news agency which said this was the clearest indication that construction was imminent.

The news agency said the details revealed state owned Shanghai Construction Group is taking part in the bidding while a unit of China Minmetals is preparing materials for the plant's foundations.

The US$2bn factory, Tesla's first in China, will bolster the US EV maker in the world's biggest auto market where its profits have been hit by increased tariffs on US imports, Reuters noted.

The so-called Gigafactory would also be China's first wholly foreign owned car plant, whose progress is widely seen as a reflection of Sino-US relations and also the degree to which China is opening up its markets.

Tesla has begun seeking bids from companies looking to build the plant, according to Reuters sources and a construction document on an official local bidding platform.

Shanghai Construction is among several firms bidding, the sources said.

Shanghai Baoye, a China Minmetals subsidiary, is preparing for the delivery of a large amount of concrete pipe piles and steel pile tips in the second half of December, according to a document on the metals giant's website sen by Reuters.

Tesla declined to comment to Reuters, Shanghai Construction did not respond to a request for comment but an official at Baoye parent China Metallurgical, a Minmetals firm, confirmed involvement.

Reuters noted Tesla sales slumped after China raised tariffs on US-built cars, prompting the automaker to cut prices to keep its models affordable.

In moves which would further lower prices, the automaker has said it aims to produce its Model 3 from 2019 at the new plant - Tesla's first Gigafactory outside of the US - and localise manufacturing and the supply chain.

Shanghai's government, in a statement on its official WeChat, said mayor Ying Yong had visited the site of the Gigafactory and that preparation work was nearly complete and construction would start soon, Reuters added.

Ying urged the firm to "accelerate" work on the factory and said production would start to some degree in the second half of next year, the statement showed.

A member of the community at Lingang near the plant's 860,000 square metre site, which Tesla secured in October, told Reuters work on ground preparation and fencing appeared nearly complete.

"Workers work very hard on this," the person told the news agency. "Sometimes they work until 10 pm at night."