It’s being reported that Tesla Inc. is entertaining the idea of a plant in China, working currently with the Shanghai government. This stems from the idea that the company could build cars in the country, without having to pay a 25% tariff on these imported vehicles.

Tesla released a statement on June 22nd stating that while the company anticipates that a majority of their production will stay in America, the need to produce factories locally will help to ensure affordability in the markets Tesla serves. The statement also relayed that the expectation of a production plant in China will be clearer by the end of 2017.

Central government in China needs organizations like Tesla to have a Chinese partner when it comes to new auto manufacturing plans, with the foreign organization owning 50 percent or less of the holding.

Tesla did not reveal which other companies could potentially partner up with them on this venture. There is some speculation around Tencent Holding Ltd., China’s largest company and known as an internet giant. Tencent gained a stake of five percent in Tesla earlier in 2017, for the price tag of $1.8 billion dollars.

Autonews advises that Tesla also did not reveal what models will be built at this potential Chinese plant. Still, a source revealed that the company might be thinking about producing a Model 3 sedan and the Model Y, which happens to be a crossover companion of the Model 3. The sedan is set for production next month at the company’s Fremont, California plant; with plans around the Model Y set for the middle of 2019.

The company is considered the most valuable auto manufacturer based in America, with market capital of over $60 billion. Still, the company has yet to earn a yearly profit.

Should be interesting on how this development will proceed in the coming weeks and months.