The first car plant in China to be wholly owned by a foreign company.
Sales in China have been affected by trade tensions.
The wholly-owned unit was registered with $30 million in capital.
Elon Musk is there for the announcement.
Tesla has registered a new electric car firm in Shanghai, as China prepares to scrap rules on capping foreign ownership of new-energy vehicle (NEV) ventures.
Tesla says it will "more clearly define [its] plans for production in China by the end of the year."
Tesla has re-booted it referral program for the third time. Is also offering no-interest loans in China to boost demand.
Tesla founder Elon Musk's tough talk at the Detroit Auto Show about the company's prospects damaged its stock price, which suffered a nine-percent drop.
Tesla wants to keep growing sales in China. The company's latest offer in Beijing, Shanghai and Hangzhou helps buyers get rid of their used car and then apply the money towards the purchase of a new Model S.
In July, 2013, before Tesla had delivered its first car to China, CEO Elon Musk called the country a "wild card." A year on, that continues to be the case, with media reports all over the spectrum concerning how Tesla is doing in China. The immediate future won't be any calmer with news that Tesla China president Veronica Wu has resigned from the company, having just taken the job in April. Hers follows the sudden departure of Kingston Chang, the man she replaced; he was hired away from Bentley