After Tesla CEO Elon Musk raised the issue of US-China automotive import and export with President Donald Trump in a series of tweets last week, it raised a few questions on the status of Tesla’s efforts to establish manufacturing capacity in China.

Shanghai authorities have now confirmed that they are still in discussion with the American electric automaker about a local factory.

As we previously reported, Tesla has been doing great in China.

The California-based automaker doubled its sales to over $2 billion in China last year.

That’s despite solely relying on exporting its cars from the US to China where they are subject to a 25% import tariff.

Tesla has been working to establish local production in order to avoid import duties for years now. Last year, the company finally confirmed working with the Shanghai government to establish a manufacturing facility in the region. However, actual production appears to still be a few years away as Tesla reportedly struggles to come to terms over the ownership of the factory.

China has strong protectionist laws that prohibit foreign automakers to own over 50% of local manufacturing facilities. The government has often discussed removing the constraint when it comes to manufacturing electric vehicles, but it doesn’t ever materialize.

Musk reportedly met with Chinese officials to address the issue, but it didn’t lead to much, so last week he turned to Trump, who has been cracking down on trade lately.

Now, the Shanghai government told Reuters in an email statement:

“Both sides will keep looking thoroughly at plans in China. Currently the details are still under discussion, once anything is confirmed we will announce it as quickly as possible. As Tesla CEO Elon Musk has said openly before, Tesla attaches great importance to its development and plans in China.”

Tesla is not waiting for a settlement over the issue in order to expand in China.

According to official documents, Tesla recently set up a new R&D company in China and in November, Musk elaborated on the automaker’s plans to establish manufacturing capacity in China with a new factory in the country within the next 3 years. Panasonic is considering coming onboard with the plan.

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