Tesla plans to fund a new wholly-owned production plant in Shanghai by borrowing from local banks in China, the company said in its quarterly statement.
Tesla had previously announced plans to build a 500,000-unit a year production plant in China. The location is understood to be Lingang, near Shanghai's Pudong Free Trade Zone where its local subsidiary is registered.
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It will be Tesla's first full manufacturing plant outside the US (it has a final assembly unit in the Netherlands) and is expected to cost around US2bn. The company is also mulling a full electric vehicle plant in Europe is demand rises sufficiently.
The company's CEO and main shareholder Elon Musk also confirmed in a conference call construction would likely start in the next "few quarters".
The first phase of the investment, for a capacity of 250,000 electric vehicles and battery packs per year, is not expected to take place before 2019 with completion expected in 2022. The first model to be produced will likely be the Model 3, followed by the Model Y crossover vehicle.
China is the largest global market for electric vehicles, with sales of around 652,000 units in 2017. Most of these were passenger vehicles.
Tesla is understood to have generated revenues of around US$2bn from this market last year, with imports from the US.
