(Yicai Global) March 15 -- The Shanghai government and Tesla Inc. will continue their negotiations for the establishment of a joint venture car plant in China, Securities Daily reported, citing a statement from Shanghai Economic and Information Commission yesterday. The report comes in response to recent speculation that the talks have broken down.

The Shanghai government has maintained good communication with Tesla and the two sides will continue their talks on the establishment of a proposed Tesla factory in China and will release necessary details once they are finalized, said the statement, quoted by Securities Daily.

Tesla's demand for full ownership of the factory is an important reason for the alleged stalemate despite the local government's positive approach to the plan, an unnamed insider told Securities Daily.

Tesla CEO Elon Musk said late last year that its China plant would be operating within three years. However, the company has yet to release any specific agreement. Musk has frequently complained about China's restrictions on foreign ownership of Chinese joint ventures and its import tariffs of late, sparking speculation that talks about Tesla's proposed China factory have been put on hold or have already broken down.

Tesla has long been seeking to make cars in China but has met difficulties in communicating with the local government, the insider said, adding that their main disagreement lies in the ownership of the factory. China caps foreign ownership of joint ventures at 50 percent, while Tesla's CEO hopes to establish a wholly owned factory.

The Shanghai government supports innovation and the development of the new energy vehicle industry. Tesla appreciates Shanghai's NEV-supportive policies, good investment climate and advantages, and hopes to ramp up investment in the city. Both sides wish to jointly promote NEV development in China, sharing the same goal, said the statement cited in the report. Tesla China has not responded to the reports yet.