If you want to make it big in the automotive world, you've got to make it big in China. So vast is China that it is a region unto itself, with a market so strong that it can demand its own special variants and models specially tailored for the Chinese demographic. Quite a number of new models these days are launched in China in tandem with their global launch; on occasion, the launch in China is ahead by a day or so.
So it makes sense that Tesla would eventually set up shop in China, not just to sell but to produce. Such is the nature of China's very strict import regulations, which means that in order to make it work in China, you've got to play by their rules and open up a factory. In Tesla's case with the constant need for cash flow, they will have to bend to China's will if they ever want a slice of that massive pie. According to Bloomberg, that factory is closer than you'd think.
Their plant in China is going to be called the Gigafactory 3, and will be located in the city of Shanghai. Spanning 200 acres and costing several billion USD to build, the plant will be operational by next year, and should hopefully see some quick returns on investment. In true Tesla fashion, they've had to take out loans from many Chinese banking institutions in order to fund this, and one wonders when Elon Musk is going to start making some long-term plays.
Don't forget that there's an already healthy number of electric vehicle offerings in the Chinese market from Chinese brands like BYD Co., NIO Inc, and Xpeng Motors. Tesla plans to roll out the Model 3 in China first which would mean targeting the entry level, but it's almost a certainty that these hometown heroes will respond in kind with more upmarket variants and a product that better caters to the Chinese demographic.