The Tesla factory, which will be built with an investment of over 50 billion yuan (USD seven billion), is the largest foreign-invested manufacturing project in Shanghai's history, state-run Xinhua news agency reported.
Musk said the plant, known as Gigafactory 3, will produce up to 500,000 Model 3 and Model Y vehicles for China and other nearby markets when it is completed in 2020.
Tesla said on Friday it plans to start delivering Model 3 cars to customers in China in March, cementing a time frame that the United States electric vehicle (EV) maker's chief executive, Elon Musk, tweeted about late a year ago.
The China plant is the result of years of negotiations with local authorities.
"China is becoming the global leader in electric vehicle adoption, and it is a market that is critical to Tesla's mission to accelerate the world's transition to sustainable energy", Musk commented.
At the height of the dispute, when China imposed the additional duty on American-made autos, Tesla sales in the Asian country - which is its second-largest market - plunged to as low as 211 in October, from 3,552 in June, according to data compiled by Bloomberg Intelligence.
Tesla has tapped into China's growing mainstream electric auto market and established its charging network covering most cities in the country's developed regions, such as the Yangtze River Delta in east China and the Pearl River Delta in the south.
Analysts say production in China would allow Tesla to side-step such measures, which have already caused a spike in the price of the cars the company now imports to the Chinese market. With these latest filings, Tesla had also broken the 200k barrier with its Model 3 VIN registrations - a notable milestone for a vehicle whose production was beset by challenges on its first year.
Tesla's plans come as China's economy faces a slowdown - something Apple said has contributed to concerns it is going to miss its quarterly revenue target. In October of past year, the company paid about $140 million to secure more than 200 acres of land for the planned factory.