Musk told analysts Wednesday that Tesla's planned factory in China will likely focus on making Model 3 sedans and Tesla's planned crossover vehicle, Model Y, for China and for some surrounding countries, Musk said. Manufacturing Tesla's lower-priced models close to their markets will ensure their affordability, Tesla said.
The company plans to make a "couple hundred thousand cars per year" in China, Tesla said.
Tesla said it will not be spending major capital in the region until 2019.
The news comes days after the Wall Street Journal reported that Tesla had struck a deal to build a factory in Shanghai.
Musk delivered the details on the plans on a conference call following the release of Tesla's third-quarter results, which were worse than analysts expected.
While the company plans to expand its international presence, analysts have expressed concerns over production delays with Tesla's Model 3 sedan, and over amount of money Tesla is having to spend to grow its businesses in autos and renewable energy.
"Tesla is learning what traditional automakers have long known – mass vehicle assembly is complicated and expensive," said Michelle Krebs, senior analyst at Autotrader. "A continued delay in Model 3 production and bigger losses were not the news hoped for with Tesla's earnings report."
Shares of Tesla were down about 5 percent in extended hours trading.