Shanghai will accelerate efforts to cancel restrictions on foreign investment in the auto manufacturing sector, a government official said on Wednesday, a day after Tesla said it would build a wholly owned auto plant in the city.

Earlier this year, China said it would scrap foreign ownership caps for companies making fully electric or plug-in hybrid vehicles in 2018 and all automotive ventures by 2022. The announcement marked a major policy shift in the world's top car market that has capped foreign ownership in the sector at 50 percent for over two decades.

Huang Ou, deputy director of the Shanghai Commission of Economy and Information Technology, told reporters at a press conference that the city government was engaged in preparations to support the Tesla project, set to be Shanghai's biggest foreign-invested project.