A sales staff chats with a customer at a Tesla store near a poster announcing orders of the Model 3 electric cars in Beijing, China, Monday, Jan. 7, 2019.
A sales staff chats with a customer at a Tesla store near a poster announcing orders of the Model 3 electric cars in Beijing, China, Monday, Jan. 7, 2019.

Tesla broke ground Monday on a new factory for its electric cars in China, the first of its factories to be located outside the United States.

Chief Executive Elon Musk appeared at a ceremony alongside local officials on the outskirts of Shanghai to mark the start of the project. He said the goal is to finish initial construction by summer and start production by the end of the year.

Tesla will build its Model 3 vehicles at the site and says it hopes to eventually have a production capacity of 500,000 vehicles per year. The factory is wholly owned by Tesla, a departure from usual Chinese policy for foreign businesses.

The new factory comes as the United States and China negotiate trade issues that have led each side to impose higher tariffs on the other's goods, including the automotive sector.

By having a factory in China, Tesla will not have to worry about consumers there facing higher prices on cars imported from the United States.