Tesla Inc (TSLA.O) broke ground on Monday for its Shanghai Gigafactory where it plans to begin making its Model 3 electric vehicles (EV) by year-end, a first step in localizing production in the world’s largest auto market.

The so-called Gigafactory is China’s first wholly foreign-owned car plant, a reflection of China’s broader shift to open up its car market, even amid a trade war with the United States which has seen a rise in tariffs on cars imported from the U.S, according to Reuters.

Producing cars locally is likely to help Tesla minimize the impact of the trade war, which has forced the EV maker to adjust prices of its U.S.-made cars in China. Keeping prices in check will also help Tesla fend off competition from a swathe of domestic EV startups such as Nio Inc (NIO.N), Byton and XPeng Motors.

“Affordable cars must be made on same continent as customers,” Musk wrote on Twitter ahead of the event.

China raised the import tariff on U.S. cars to 40 percent in July, but cut it to 15 percent from the start of this year as part of a trade war ceasefire. The lower rate will last until the end of March pending trade talks.