Tesla Inc is taking another step toward making cars in China, after reportedly inking a preliminary deal with the Shanghai government to set up a plant in the coastal city. "Tesla recognizes the favorable investment environment in Shanghai and its multiple advantages," the commission said. The report comes just days after Tesla registered a wholly owned subsidiary in Shanghai, focusing on electric vehicle-related research, spare parts, batteries and solar panel products. It already has other wholly owned companies registered in China that focus on sales, and research and development. "With China being the largest electric vehicle market, having direct access to the market with affordable vehicles is a very attractive proposition for Tesla," he said.