Pretty much everybody knows just how strict China is with foreign companies, however, the country is planning to relax some rules requiring foreign car making companies to have a local partner, according to people familiar with the matter. This move of the automaker could allow the U.S.-based electric carmaker – Tesla Motors – to manufacture vehicles in China.

China considering relaxation in certain rules

This would allow Tesla Inc. to manufacture its electric vehicles in the country. The automaker, which is headed by CEO Elon Musk, has dreamt of planting its flag in China since a long time because China is the biggest market for electric vehicles in the world. However, finding a local partner is a difficult task in China.

There has been a talk of bringing some relaxation in these rules for quite some time and Donald Trump, the President of USA, made a decision to release an investigation into Chinese trade practices last month. The people familiar to the matter said the investigation was probably into Chinese trade practices likely accelerated discussions.

The sources further said that China is also preparing to enable the foreign companies to manufacture electric cars without a Chinese partner in free-trade zones under a draft proposal shared with auto-industry executives but the vehicles would be still be subject to import tariffs if sold in the country.

Chinese ministry refuses to confirm plans

The people said China is preparing to allow foreign companies to manufacture electric vehicles in free-trade zones without a China-based partner but the EVs would be still subject to import tariffs if sold in the country. News site Bloomberg reported about this plan before.

On Thursday when Gao Feng, the commerce ministry spokesman of China was asked about the plans by state-owned broadcaster CCTV at a press briefing, he refused to confirm those plans. He said that in the future, the government would roll back policies limiting foreign investment in electric cars, without mentioning joint-venture rules. Such a change would be a limited concession by China till a 25% tariff stays in force, according to Industry experts.

The country allowed foreign battery companies last year to set up wholly owned companies in selected free-trade zones, including Shanghai. For Tesla, this development would be a huge change. Recently, Ford Motors, General Motors, Volkswagen AG and several other foreign manufacturers with established operations in China have declared plans to start or increase their EV production after Beijing started to phase out traditional diesel and gas vehicles.