Power-driven car maker Tesla Inc. confirmed on Sunday that it is talking with the Shanghai government to establish a factory in the region and supposes to agree on a plan by the end of the year, but failed to comment on a report that a deal has been reached.

China charges a 25 percent duty on sales of imported vehicles and has not permitted foreign automakers to establish solely owned factories in the country, the world’s largest auto market. Those are difficulties for Tesla, which wants to increase its presence in China’s growing electric vehicle market without compromising its independence or intellectual stuff.

The government of China has considered allowing foreign automakers to set up solely owned factories in free trade zones in part to inspire more production of electric and hybrid vehicles — which the government calls “new energy vehicles” — to meet ambitious sales quotas.