Tesla has an agreement with the Shanghai government to explore a Chinese manufacturing plant.

The US electric carmaker company wants to build electric cars in China to improve shipping, manufacturing jobs and to avoid a 25% tariff on imported vehicles.

According to Tesla’s annual report, China’s revenue tripled more than US$1 billion last year, with shares over US$378,50 in premarket training.

“The entrance of Tesla into local production is a necessary step for Tesla to gain relevance in the world’s largest EV market,” said Bill Russo, former Head of Fiat Chrysler Automobiles NV’s Chrysler unit in China. “Tesla’s participation so far has been limited to imported Model S and Model X cars. However, unlocking the mass market will require a price point that is only achievable with a locally produced Model 3.”

According to CNBC, the majority of their production will still remain in the US.

Written by Leah Alger