Tesla CEO Elon Musk in China

Tesla’s third Gigafactory, which will produce more than 500,000 cars per year, is taking shape. The company announced on Wednesday the completion of a “land transfer agreement” for a 210-acre site in Lingang, a district in the south east of Shanghai. The announcement comes just three months after the company signed a cooperative agreement over the project, and it bodes well for Tesla’s plans to build inroads into the world’s largest electric vehicle market.

“Tesla’s mission is to accelerate the world’s transition to sustainable energy not only through all-electric vehicles, but also scalable clean energy generation and storage products,” Robin Ren, Tesla vice president of worldwide sales and head of the China team, said in remarks reported by Electrek. “Securing this site in Shanghai, Tesla’s first Gigafactory outside of the United States, is an important milestone for what will be our next advanced, sustainably developed manufacturing site.”

See more: Elon Musk Praises Tesla China Team As Next Gigafactory Takes Shape

The New York Times reports that an agreement came after China’s government dropped its opposition to electric vehicle manufacturers under complete foreign ownership. The project will help Tesla avoid issues like import controls and tariffs, as well as offering faster services for its Chinese consumers. China account for an estimated 500,000 electric car sales last year, far outpacing the second-placed United States with just under 200,000 cars. However, Tesla only accounted for around three percent of China sales last year.

The plant is the company’s third Gigafactory. The first, based in the Nevada desert, is currently producing around 20 gigawatt-hours of battery capacity per year with plans to reach 35 gigawatt-hours when construction is fully complete. The second is the Buffalo, New York, solar cell factory. The Shanghai plant is expected to produce vehicles in around two years, before ramping up to full production capacity in a further two to three years. Musk has also suggested a fourth and fifth Gigafactory, one of which will be based in Europe.

Tesla may release more details about its new Shanghai factory, plus its future Gigafactory plans, at the company’s next earnings call around the start of November.

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