Factory will open in around two years, and can make up to 500,000 cars annually

Tesla has announced the purchase of 860,000 square metres of land from the Shanghai government for a new Gigafactory.

The news was revealed on the QQ social network overnight. According to land transaction records dug up by the Yuan Talks website, the plot of land cost 973 million yuan ($199 million).

From earlier reports, the new factory has an estimated cost of around US$2 billion, which Tesla intends to raise in Asian debt markets.

In a statement from July to Electrek, when Tesla signed a preliminary agreement with the Shanghai government, the company stated it hopes to begin production within two years of gaining all the necessary construction permits and approvals.

The factory will reportedly have annual production capacity of around 500,000 cars. Tesla claims it will then take a further "two to three years [after opening] before the factory is fully ramped up".

Above: Tesla and Shanghai officials at a signing ceremony. Top: Nevada battery Gigafactory.

Once the factory is up and running, Tesla will be available to avoid a 40 per cent import tariff on locally-produced cars. It will be the company's first production site outside the USA.

Earlier this year, China eased its rules regarding foreign ownership of vehicle manufacturing facilities, allowing electric vehicle plants to operate without a local joint venture partner by the end of 2018.