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Tesla confirmed on June 22 that it is in talks with Shanghai's government about the possibility of opening the former's first factory in the world’s largest auto market. The electric-car manufacturer said in an emailed statement that it expects to “more clearly define its plans for producing electric vehicles in China by the end of the year.”

Under the current regulations, a local partner is required for Tesla to establish a manufacturing center in China.

“Tesla is deeply committed to the Chinese market, and we continue to evaluate potential manufacturing sites around the globe to serve the local markets,” Tesla said in the statement.

Tesla didn’t mention with whom it will partner, and speculation lingers after two rumored candidates officially denied that they had any contact with Tesla. Shanghai Lingang Holdings Co. Ltd. dismissed previous media reports late on June 22, saying that the Lingang development zone will not be home to the upcoming China factory, since it has neither been in contact with Tesla nor reached a deal on a factory. Shanghai Electric Group followed with a similar statement.

Tesla’s announcement came days after U.S. automaker Ford announced plans to shift some production of its Focus model to China starting in 2019, a move that was deemed an act of defiance against the Trump administration's “America first” doctrine.

U.S. trade representative Robert Lighthizer said on June 22 that he was troubled by Ford’s move, and vowed to take countermeasures if the shift was planned for non-economic reasons. Tesla, meanwhile, promised that most of its production will stay in the United States, its most important market which provided $4.2 billion of the company's $7 billion 2016 revenue. China narrowed the gap last year after sluggish sales throughout 2015.

In a document filed with the U.S. Securities and Exchange Commission (SEC), Tesla recognized that the Chinese market contributed over $1 billion in 2016, with at least 11,000 vehicles ordered. The new factory would theoretically boost Tesla's China sales by eliminating a 25 percent import tariff that made its vehicles pricier in China than in U.S. markets.