After Tesla deal, Shanghai to speed up cancellation

SHANGHAI (Reuters) – Shanghai will accelerate efforts to cancel restrictions on foreign investment in the auto manufacturing sector, a government official said on Wednesday, a day after Tesla ( TSLA.O ) said it would build a wholly owned auto plant in the city.

Earlier this year, China said it would scrap foreign ownership caps for companies making fully electric gold plug-in hybrid vehicles in 2018 and all automotive ventures by 2022. The announcement marked a major policy shift in the world's market share of 50 percent for over two decades.

Huang Ou, deputy director of the Shanghai Commission of Economics and Information Technology, told reporters at a press conference that the city government is involved in the preparation of the Tesla project, set to be Shanghai's largest foreign-invested project.

"The next step is for the city government to make it work as quickly as possible," he said.

"In line with state plans, we will speed up the cancellation of foreign manufacturing," he said.

Huang declined to how, however, on the size of the project or the construction of a 500,000 Tesla battery – a start by auto industry standards – would start.

Tesla Inc. ( TSLA.O ) Chief Executive Officer Elon Musk Landed on a New Construction Site in Shanghai, the company's first factory outside the United States. It would be double the size of the electric car maker's global manufacturing.

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An auto badembly plant half the size of the envisioned Tesla Shanghai plant would normally cost $ 1 billion to build, according to automotive industry officials and experts.

The Shanghai government said in a statement on Tuesday that it is worth noting that it is investing in development research.

Chinese magazine Caijing, citing sources close to the project, reported on Tuesday that the plant's exact location had not been decided.