(Yicai Global) Oct. 24 -- Guo Lei, an official from the Shanghai Municipal Commission of Economy and Informatization, responsible for new-energy vehicle projects, has refuted media reports that US electric vehicle giant Tesla Inc. [NASDAQ:TSLA] has agreed a deal with local authorities to set up a wholly-owned manufacturing facility in Shanghai Free Trade Zone, Ifeng Finance reported yesterday.

Tesla also responded to media reports yesterday saying that both parties are still exploring the possibility of building such a factory in Shanghai.

The firm has been looking into setting up a facility in China since as early as 2015, when founder Elon Musk said publicly that building a factory in the country could reduce vehicle prices in the market by one-third.

If Tesla sets up a wholly-owned manufacturing factory in China, it will greatly lower its vehicle production costs and selling prices in China, online media outlet Ebrun quoted Bill Russo, head of automotive at Gao Feng Advisory, as saying. The firms' vehicle prices in China are about 50 percent higher than those in the US market at present.

Tesla's electric vehicle sales in China reached 10,400 units in 2016, a three-fold annual increase, data from research company JL Warren Capital show. The Chinese market made up 13 percent of its global sales in 2016 to bring in USD1.1 billion in revenue, some 15 percent of the global total for the year.