Tesla shares jump on report the company is close to setting up shop in China

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Elon Musk, Chairman, CEO and Product Architect of Tesla Motors, addresses a press conference to declare that the Tesla Motors releases v7.0 System in China on a limited basis for its Model S, which will enable self-driving features such as Autosteer for a select group of beta testers on October 23, 2015 in Beijing, China.

Shares of Tesla rose nearly 3 percent in the premarket Tuesday after Bloomberg News reported the electric car company is close to a deal to produce cars in China.

The report, which cites people familiar with the matter, said the deal would allow Tesla to build facilities in Shanghai’s Lingang development zone. An official announcement could come as soon as this week, but details are still being finalized and the timing could change, the report said.

Tesla did not immediately respond to CNBC’s request for comment.

Elon Musk’s Tesla is a growing player in China, where the global fight to develop electric, self-driving cars is raging hot.

Hong-Kong traded Tencent, a company best known for its WeChat messaging app, disclosed in a Tuesday filing that it’s taken a 5 percent stake in Tesla for $1.78 billion. The investment follows Tencent’s new stake in taxi-hailing app Didi Chuxing, which can be accessed through WeChat.

This is not the first time Tesla has been linked to a factory opening in China. Earlier this year, a local Chinese newspaper — citing multiple sources — reported that Tesla was planning to build a factory in the Guangdong province of the country. Tesla denied the report.

Click here to read Bloomberg’s full report.

—CNBC’s Evelyn Cheng contributed to this report.