Tesla Inc. won permission to start mass production at its China factory, clearing one of the last hurdles to begin selling locally built cars in the world’s largest electric-vehicle market.
The clearance was disclosed by China’s Ministry of Industry and Information Technology on its website Wednesday. Tesla unveiled its first vehicles assembled at the Shanghai facility earlier this month, made as part of trial operations.
China’s first plant wholly owned by a foreign automaker — and Tesla’s first outside the U.S. — is a crucial test of CEO Elon Musk’s bid to prove his company can sustain profitability as he bets on Chinese EV demand.
The Shanghai Gigafactory, which broke ground in January, will initially build Model 3 sedans which start at about $50,000. It will compete with electric cars from local contenders such as NIO Inc. and Xpeng Motors, as well as global manufacturers including BMW Group and Daimler.
The Shanghai rollout will also provide clues about Tesla’s ability to truly go global. Musk announced Tuesday that the company will round out its global manufacturing network with a factory in Berlin.
In addition to a manufacturing permit, automakers in China need to have their products approved for sale. Authorities have yet to disclose such a clearance for Tesla’s China-built-models.