Tesla has plans to build an assembly plant in Shanghai with a production capacity of 500,000 vehicles a year, reports Bloomberg.

Why it matters: The agreement signals Tesla's most concrete step yet to expand electric car production outside the United States, though it comes on the heels of price hikes in China as the result of retaliatory tariffs on American auto imports. Of course, Tesla has struggled to reach production goals at its California-based plant, so expectations that a Shanghai factory could immediately rival U.S. capacity should be tempered.