Tesla received the business license for its subsidiary from the market regulation bureau of the Pudong New Area on Thursday, Xinhua quoted the National Enterprise Credit Information Publicity System as saying on Monday.
The California-based automaker has reportedly submitted registration filings to establish a local entity known as Tesla Shanghai Co. Ltd., which is listed as the sole shareholder of the new Shanghai-flagged corporation.
The licence, dated May 10, allows Tesla to conduct R&D on electric cars, auto parts, batteries and solar panel products.
As China plans to fully open its auto market to foreign ventures, Tesla ignites plans for its first non-US Gigafactory. That is not almost enough to build a factory, but a start nonetheless.
Tesla sold 17,000 vehicles on the mainland previous year, up 51.6 per cent from 2016, according to the China Automobile Dealers Association.
China recently announced that foreign companies can operate 100 per cent-owned factories in the country, making the market a particularly tantalizing destination for Tesla. It has other wholly-owned firms registered in China focused on sales and research and development.
Tesla has set up a new wholly owned company in Shanghai, moving a step closer to producing its electric vehicles in China and establishing its first gigafactory outside USA shores.
Tesla boss Elon Musk has already said that the next Gigafactory will be in China, although the official announcement isn't expected until the third quarter of this year. Earlier this month, Tesla chief Elon Musk thanked Beijing for scrapping limits on foreign ownership of local electric vehicle firms.