Tesla may be about to secure a big win in China.
Chinese officials have shared a draft proposal with auto executives that show the country is preparing to relax rules that have forbidden foreign automakers from building in the country without a Chinese partner, the Wall Street Journal first reported.
Foreign companies would still be subject to a 25% import tariff, but they could build electric vehicles without a Chinese partner, according to the report.
The move would be a big win for automakers that have been hesitant to build in the country out of fear the partnership would compromise their intellectual property. Tesla has the incentive to protect its driver-assistance Autopilot technology that has become an integral part of the electric automaker’s brand.
A Tesla spokesperson referred Business Insider to a June statement that said the automaker is interested in building a manufacturing facility near Shanghai.
“Tesla is working with the Shanghai Municipal Government to explore the possibility of establishing a manufacturing facility in the region to serve the Chinese market,” the statement reads. “As we’ve said before, we expect to more clearly define our plans for production in China by the end of the year.”
Tesla expects most of its production to remain in the US, but is looking to establish local factories to keep its vehicle prices affordable, the statement continued.
Chinese internet giant Tencent acquired a 5% stake in Tesla in March, highlighting a vote of confidence in Tesla’s position in the world’s most populous country.
China, the world’s largest auto market, is an important country for Tesla. The company’s sales in China more than tripled in 2016, accounting for 14% of the company’s total revenue last year. China plans to eventually ban the sale of all diesel and petrol cars.