Tesla will break ground today for its Shanghai gigafactory where it will begin making Model 3 electric vehicles (EV) by the end of the year.

This is according to a tweet from chief executive Elon Musk ahead of the formal start of construction of the firm's first Chinese plant. 

The $2 billion factory - long under discussion - marks a major bet by the US electric vehicle maker as it looks to bolster its presence in the world's biggest car market.

Tesla faces rising competition from a swathe of domestic rivals in China and its sales have been hit by increased tariffs on US imports.  

"Looking forward to breaking ground on the @Tesla Shanghai Gigafactory today!" Musk wrote in a post on Twitter. 

Musk has said previously he would attend the event in Shanghai. Tesla officials in China declined to comment. 

The carmaker, which currently imports US-made vehicles to sell in China, is building the plant in an auto market that is set to contract this year for the first time in decades, though so-called new-energy vehicle (NEV) sales have been strong. 

China raised the import tariff on US-made cars to 40% in July, but cut it back to 15% from the start of this year as part of a ceasefire in a trade war with the US. 

The lower tariff will last until the end of March pending trade talks.

A local plant will help Tesla lower prices in the market to compete with a new generation of local rivals including Nio, Byton and XPeng Motors.

"Affordable cars must be made on same continent as customers," Musk said in another tweet.

Tesla has been pushing forward its plans for the plant after it secured the site in October, hiring staff, starting procurement for building materials and setting up a financial leasing company in the city.

The so-called gigafactory would also be China's first wholly foreign-owned car plant, a reflection of China's broader shift to open up its car market even amid the whipsawing trade war.

Tesla plans to produce its Model 3 and Model Y cars in the initial phase of production at the Shanghai plant, with an annual capacity of 250,000 vehicles. 

"Aiming to finish initial construction this summer, start Model 3 production end of year & reach high volume production next year," Musk wrote in a separate post on Twitter. 

"Shanghai Giga production of Model 3/Y will serve greater China region," Musk added in another one.

China is the largest market for electric vehicles, and most forecasters predict EV sales in the country will accelerate rapidly as the government drives toward a goal of 100% electric vehicles by 2030.