Tesla CEO Elon Musk revealed his company's plans Thursday to begin production for electric cars in China within the next two years.
The entrepreneur said at a forum at Tsinghua University in Beijing that producing cars locally could help cut prices of Tesla cars by a third thanks to reduced shipping costs and a lack of import duties, according to The Wall Street Journal.
China currently stands as the world's largest car market, selling 28,092 electric and hybrid plug-in electric vehicles in the first three quarters of 2015 and nearly 20 million cars last year.
Foreign automakers interested in producing cars in China usually have to establish a joint venture before doing so, Reuters reported.
The announcement comes as Tesla has had a tough year in the country, as low sales have led to the company cutting 30 percent of its 600-member staff. Tesla said Friday that it sold 3,025 Model S vehicles in China between January and September.
Musk believes that China's huge demand for electric cars will make this move successful, saying that more than half of the newly produced vehicles in the world will be battery-powered by 2030 and that China will take the biggest share, WSJ noted. The company also pledged to make sure that its cars will meet the country's charging standards
Among the Tesla vehicles that are currently available in China is the Model S sedan, which starts at 673,000 yuan (about $106,000).
Musk said that Tesla has a high chance of being able to form a partnership with a local partner to start production in China, according to Reuters. He added that the company is already working with Chinese Internet company Baidu Inc. on GPS navigation and self-driving technology.