Paving the way for a merger with SpaceX, Tesla separates its Shanghai factory?

SHANGHAI — Tesla is reportedly considering separating its business in China as a move that could pave the way for a potential merger with SpaceX.

Quoted from Reuters, from a source familiar with the matter. As of the writing of this news, neither Tesla nor SpaceX has provided a response.

The Gigafactory Shanghai began operations in October 2019. The facility became the first car factory in China wholly owned by foreign investors, marking the openness of the automotive sector in the country.

Since then, Gigafactory Shanghai has grown to become Tesla's largest and most productive manufacturing facility in the world. The factory also serves as Tesla's main export hub for the European, Canadian, and Asia-Pacific markets.

Gigafactory Shanghai produces the Model 3 sedan and Model Y SUV. According to company data, its production capacity reaches more than 950,000 vehicle units per year.

Tesla China Vice President of External Relations, Grace Tao, said the Shanghai factory accounted for more than half of Tesla's global vehicle deliveries in 2025. In addition to Shanghai, Tesla also has vehicle assembly facilities in California, Texas, and Berlin.

Tesla sources more than 95% of the vehicle components produced in China from local suppliers. The company collaborates with more than 400 domestic suppliers, and more than 60 of them also supply components for Tesla's operations in other countries.

The localization of the supply chain helps Tesla reduce production costs while mitigating the impact of global logistics disruptions.

Deliveries of China-made Tesla vehicles increased for eight consecutive months until June 2026. This increase was driven by demand from export markets, including Europe. Throughout Q2 2026, Shanghai factory sales, including exports, grew by approximately 33% compared to the same period last year.

Local production helped Tesla dominate the premium electric vehicle market in China during the early stages of its expansion. In 2025, China became Tesla's second-largest market after the United States by revenue. Meanwhile, the Shanghai-made Model Y became one of the best-selling passenger cars in China, regardless of fuel type.

Nevertheless, competition in China's electric vehicle market has become increasingly fierce since Tesla entered the country in 2019. Local manufacturers have successfully narrowed the technology gap, supported by integrated supply chains, faster product development cycles, and aggressive pricing strategies.

BYD is now one of Tesla's main competitors in the electric vehicle market. Competition also comes from other Chinese manufacturers, such as Xiaomi, Xpeng, and Li Auto. (ARF)

This translation was generated by AI (Google Gemini) from Indonesian.