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Shares of Tesla Inc (TSLA) - Get Tesla Inc Report started off higher on Wednesday, but have quickly slipped lower on the day, down more than 3.5% to $267.

News that Elon Musk plans to buy another $20 million worth of stock -- bringing his insider purchases up to about $50 million since April -- and progress in China helped jumpstart the stock.

But reports that Tesla's vice president of manufacturing Gilbert Passin has left the company isn't sitting well with investors. The Tesla exodus is certainly a concern, but should it be enough to outweigh Wednesday's progress?

The company purchased a plot of land in Shanghai totaling almost 885,000 square meters. The plot is located in the Lingang area and it's expected that Tesla could be producing its first cars in just a couple of years. However, Tesla is attempting to speed up its Gigafactory 3 timeline, saying in its recent production report that, "We are accelerating construction of our Shanghai factory, which we expect to be a capital efficient and rapid buildout, using many lessons learned from the Model 3 ramp in North America."

Remember, on the automaker's most recent conference call, CEO Elon Musk explained that future factories would house both auto production and battery-pack production. In others, it would be like merging Tesla's Fremont factory in California where it produces the Model S, X and 3 with the Gigafactory in Nevada, where it produces the batteries for each Tesla car.

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Also on the previous conference call, Musk said he expects the China factory to cost "a lot less" than the first one the company built in the U.S. The budget for that building was $5 billion, but Musk believes Tesla can build the one in China for $2 billion, although he did say that was "just a guess."

Management's credibility isn't as strong as say, Apple (AAPL) - Get Apple Inc. (AAPL) Report or Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report necessarily, but they are getting better and more reliable in respect to their outlooks.

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In that regard, Musk believes Tesla could produce 250,000 cars at the factory, with expectations to eventually produce 500,000 vehicles per year. 

Tesla is facing several issues right now in regards to China. Despite the country being the world's largest electric vehicle (EV) market, Tesla is struggling, thanks to mounting tariffs. Additionally, EVs built inside China qualify for a substantial discount off the selling price.

Tariffs can make a U.S.-built Tesla 30% to 40% more expensive, while domestically built EVs in China receiving a discount make the price disparity even more.

So it's no wonder that Tesla is attempting to speed up its China operations. To compete against Warren Buffett-backed BYD Group (BYD) - Get Boyd Gaming Corporation Report and the newly public Nio (NIO) - Get NIO Inc. Sponsored ADR Class A Report , Tesla has to produce within China.

Thanks to a system the moves much more quickly than commercial U.S. construction, Tesla's hope is that it can quickly build its factory to get up and running in China. Unlike other automakers, like General Motors (GM) - Get General Motors Company (GM) Report and Ford (F) - Get Ford Motor Company Report , which had to obtain joint venture partnerships, Tesla will own 100% of its own Chinese operation. 

The Chinese government is making a push for more EVs and Tesla can play a vital role in that move. Wednesday's news is just one more step in that direction. 

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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.