Tesla Inc signed an agreement with the government of Shanghai in regards to the plot of land to be used for construction of first foreign Gigafactory, Reuters reports.

This agreement is another step towards creating production in China, which is a fast growing market.

Tesla signed a first agreement in July. It assumes construction of first plant outside of the US and will help to double output. This will also result in lower prices for electric cars that Tesla sells in China.

Capacity of factory will be 500000 cars per year.

Sales of e-cars and hybrids in China grew by 54,8% in September and by 81,1% in first nine months of this year to 721000 cars.

Tesla is planning to attract capital in Asia’s debt market to finance construction, which is evaluated at about $2 billion.