Tesla is on the verge of starting production in China, five years after CEO Elon Musk first announced that the company would eventually build cars in the country.

Tesla is aiming to start production at its newly constructed plant in Shanghai later this month, Reuters reported on Wednesday, citing people familiar with the matter.

The first model will be the Model 3, and Tesla is aiming to churn out at least 1,000 examples of the small electric sedan per week initially, one of the sources told Reuters. The actual rate will depend on performance of the newly hired works and the supply chain, the source said. Tesla previously said it would like to build 3,000 cars per week at the plant initially.

The Shanghai plant is the first of Tesla's foreign production sites. Another is expected to be built in Germany, eventually.

The Shanghai plant is also the first fully foreign-owned car plant in China, and it has the capacity to build 250,000 vehicles annually in this first phase. A second phase is planned to lift capacity to 500,000 vehicles.

The plant is also expected to build the Model Y once that model is ready, as well as batteries. Note, Tesla will also build the Model Y in the United States, most likely at the company's main plant in Fremont, California.

Production at the plant is starting amid the U.S.-China trade war and slowing sales in China, including for so-called New Energy Vehicles which include battery-electrics like Teslas. Despite this, Tesla has managed to grow sales in China this year, with sales up 98 percent in the first seven months, according to research firm LMC Automotive. The strong growth is attributed to the Model 3 which will only become more attractive with local production as the car will be able to avoid tariffs.