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If a new report is to be believed, Tesla is shifting a portion of its production overseas as it ramps up facilities in order to meet greater demand. Delays are quite common with the company’s new vehicles and as it looks to start production on the Model 3, Tesla is taking steps to ensure that those problems don’t resurface with its mass-market electric car. A new report suggests that for this purpose, Tesla is building a $9 billion factory in China.

Bloomberg reports that Tesla has signed a non-binding agreement with Chinese government-owned company Jinqiao Group to start work on a Tesla production plant in Shanghai. A person close to the matter says that this deal is worth $9 billion.

It’s not like Tesla has not been clear about its intentions of starting production in China. CEO Elon Musk said a few months ago that the company is going to choose a site for its facility in China by mid-2016, and the report lines up nicely with that timeframe.

The report also claimed that both Tesla and Jinqiao Group will contribute $4.5 billion to this project. So far there has been no public announcement from either company to confirm that they have reached an agreement to build a Tesla manufacturing plant in Shanghai.

Aside from improving Tesla’s production capacity, it’s also going to make it cheaper for the company to sell its cars in the lucrative Chinese market, because when they will be built locally Tesla won’t have to pay the 25% import tax that it currently has to on every Tesla sold in China.

Filed in Transportation. Read more about elon musk and tesla.

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