The electric car company founder said Tesla would open a design and engineering center in the world's second-largest economy. He did not specify any timelines.
Tesla also confirmed that it would start work on a production program for its Model Y crossover vehicle in its Shanghai Gigafactory, the only production factory outside of the U.S. Production for its Model 3 — a sedan that was announced before the Model Y back in 2016 — only started in October in the Shanghai factory.
Musk made the announcements as he delivered the first Model 3 cars out of the Shanghai factory to the public.
"We intend to continue making a significant investment and increasing the investment in China, making the Model 3 and the Model Y and future models also in China," Musk told an audience in Shanghai.
"Something that would be super cool … So we're going to do it … is to try to create a China design and engineering center to actually design an original car in China for worldwide consumption. I think this will be very exciting," he added.
China is seen by analysts as a critical market for Tesla but it faces a number of challenges from cooling electric vehicle sales to increasing competition.
Still, the company has produced positive news with a profitable third quarter of 2019 and fourth-quarter vehicle delivery numbers that topped Wall Street estimates. Shares of the firm hit a record high of $454 last week.