May 15 (NBD) -- U.S. electric vehicle and solar panel maker Tesla Inc. has set up its new car plant by registering a new firm in Shanghai, China, moving closer to localize production in China.

According to the National Enterprise Credit Information Publicity System, the new firm Tesla Shanghai Co. Ltd. was established in the Pudong New District of Shanghai on 10 May. With registered capital of 100 million yuan (15.8 million U.S. dollars), the new firm is fully owned by Tesla's Hong Kong subsidiary.

NBD noticed that the new plant's business doesn't cover car or battery manufacturing. Public fillings also show the company will focus on the technology research and development and product sales, such as technology development, technology services, technology consultation and technology transfer in electric cars and components, battery, energy storage equipment and photovoltaic product fields.

The new decision came after Tesla's financial results for the first quarter of this year. According to the report, Tesla's net loss widened to a record 784.6 million U.S. dollars in the quarter ended 31 March, from a loss of 397.2 million U.S. dollars a year ago. Besides, its cash dwindled to 2.67 billion U.S. dollars by the end of this quarter, compared to 3.37 billion U.S. dollars by the end of the last year.

Tesla said it expects to make gains in the third and fourth quarter of 2018. However, while the electric car maker spent heavily on the Model 3 production, the company didn't reach its estimated production rate of 2,050 per week by the end of the first quarter. Though the car maker reiterated that the rate will increase to 5,000 per week by June, Goldman Sachs analyst David Tamberrino predicted that it would only produce 1,400 per week.

The Shanghai-based company is expected to help Tesla grab more market shares in China and cut the sales price of Model 3 for domestic market. The localization of production will keep the base price of Model 3 at around 300,000 yuan (47,254.5 U.S. dollars).

Apart from Tesla, a batch of domestic car makers including Nio and Byton also beef up efforts to improve the production.

Tesla's new move will reshape China's new energy vehicle (NEV) industry, and high middle- and high-end NEV manufacturers will face fiercer competition, Zhai Shaohui, deputy secretary of China Automobile Dealers Association, said to NBD.

It is noted that the Tesla is projected to spend a total of 5 billion U.S. dollars on its first gigafactory in Sparks, Nevada, thus the company needs a huge financing for the establishment of Shanghai plant. Tesla CEO Elon Musk revealed in a teleconference that it takes at least one year for a gigafactory to finish construction and go into operation.

Email: zhanglingxiao@nbd.com.cn