As Electrek reports, Tesla exports loads of vehicles to China, even despite the pre-existing 25 percent import tax for local buyers. Currently, the tariff is 40 percent; the only way for the company to sidestep these taxes is to manufacture locally. There have been rumblings that the automaker was looking into building a local factory for years, with a report from last October claiming that Tesla had landed a deal to build a manufacturing facility in Shanghai's free trade zone.

Now it looks like Musk doesn't have another option but to build if he wants to keep moving as much product to China.