Tesla has brushed reports that it plans to set up a factory in China's Guangdong province.

"Tesla is deeply committed to the Chinese market, however, the rumors that we plan to open a factory in Guangdong are not true," a Tesla representative stated in an email to CNBC.

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Guangdong's local newspaper, the Southern Metropolis Daily, reported on April 10 that Tesla plans to fund and establish a factory in the region.

"[The] factory address has been picked, the plan is waiting for approval from relevant department in local government. If the plan goes smoothly, Tesla will announce this project within this year," the report, which cited several sources, said.

According to experts, the presumption was potentially based on Chinese tech giant's Tencent's recent acquisition of a five percent stake in Tesla, as well as China's increasing demand for new energy cars, ECNS reported. Rumors have also surfaced that Tesla is planning to build new manufacturing facilities in Suzhou, Jiangsu Province, and Shanghai, but the company has denied them.

Should the report be true, Tesla could theoretically decrease its border tax, the Southern Metropolis Daily noted. Although Tesla remains dominant in the electric vehicle market, crossing a market cap of $49 billion last week, the competition particularly among start-ups is beginning to heat up. Many of these start-ups are funded by Chinese capital investors who are also looking to get a slice of the booming market.

In the first quarter of this year, Tesla reported a record delivery of around 25,000 vehicles, up by around 69 percent year-on-year. Tesla will start the production of its Model 3 vehicle later this year.

TagsTesla, china, electric car market, Tencent