New reports claim that American automotive and energy storage company Tesla Motors has agreed to a non-binding agreement with the Chinese state-owned company Jinqiao Group. It is believed that Tesla will give the rights to Jinqiao Group to construct a production plant in the Chinese city of Shanghai.

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A person with insider knowledge about the deal said that the investment could cost around $9 billion. This latest development comes about six months after Tesla chief executive officer Elon Musk publicized his intention to pick a production facility based in China in the middle of 2016.

Tesla and Jinqiao Group will each invest $4.5 billion on the project. If the rumors are true, the Tesla Motors-Jinqiao Group deal will be significantly bigger than the Walt Disney Shanghai Resort project with cost $5.5 billion.

Many industry experts believe that Tesla's decision to locate its production in China is to avoid the 25 percent import tax levied for each electric vehicle the company ships into the country.

The latest deal was not announced to the public, so no estimated timeline regarding when the project will start was released. On the other hand, two other Chinese cities are also attempting to persuade Tesla Motors to locate its assembly plant in their respective cities. The two cities are Suzhou and Hefei.

Given these factors, the Tesla Motors-Jinqiao Group deal may be far from being closed.

Recently, Tesla China hosted a special delivery event for the first 6 Tesla Model X owners in the country. The event was graced with the presence of Tesla vice president for the Asia Pacific Ren Yuxiang and Tesla China general manager Zhu Xiaotong. The two executives personally handed the keys to the first Chinese owners of the Model X cars.

Five of the six Tesla cars delivered were all white, a color which represents the metal element and symbolizes purity in the Chinese culture.

TagsTesla, tesla motors, china, China Tesla, Tesla China Factory, Jinqiao Group, China Jinqiao Group