Tesla has reached a deal with Shanghai to secure a large plot of land for its first overseas ‘Gigafactory’.

The plot of land is 210 acres, or 860,000 square meters, making it about half the size of its Fremont Factory in California. The American electric vehicle maker did not disclose how much it paid for the site, but The Shanghai Bureau of Planning and Land Resources told Reuters a near-865,000 m² plot of land had recently been sold for the equivalent of $140.51 million USD.

The transaction is a major step forward for Tesla as the automaker looks to make a manufacturing footprint in the world’s largest automotive market and most populous country. Having a local manufacturing site in China is more important than ever for US automakers after the Chinese government imposed additional tariffs on goods made in America.

“Securing this site in Shanghai, Tesla’s first Gigafactory outside of the United States, is an important milestone for what will be our next advanced, sustainably developed manufacturing site,” Tesla VP of worldwide sales, Robin Ren, said in a prepared statement.

SEE ALSO: 2018 Tesla Model 3 Review

Wall Street analysts and industry experts were expecting Tesla to make an announcement in regards to the Chinese factory after the automaker signed an agreement with the Shanghai government in July to open a plant there. That agreement indicated the site would have an annual capacity of 500,000 cars.

Tesla says it will be “roughly two years” before a vehicle will roll off the assembly line at the Chinese plant. It will take another two or three years for the factory to ramp up to full capacity as well, so it will be at least five years before the site is producing 500,000 vehicles annually.

[Source: Reuters]

A version of this story originally appeared on AutoGuide.