Tesla is considering a separation of its China business to pave the way âfor a potential merger with SpaceX, âthe Wall Street Journal reported, citing a person familiar with the âtalks.
Reuters was unable to independently verify the report. Tesla and SpaceX did not immediately respond to requests for comment.
Below are key facts regarding Tesla’s operations in China:
Tesla’s Gigafactory Shanghai began production in âOctober 2019, becoming â China’s â first wholly foreign-owned car plant and symbolising Beijing’s opening of its automotive sector.
The factory has since become Tesla’s largest âand most productive site globally, serving as its main export hub for Europe, Canada and the Asia-Pacific âregion.
The plant produces the Model 3 compact sedan and Model Y sport utility vehicle and has annual production capacity of more than 950,000 vehicles, according to company data.
The Shanghai factory âaccounted for more than half of its global vehicle deliveries â in 2025, âGrace Tao, Tesla vice president in charge of external relations in âChina has said.
Tesla’s âother vehicle assembly plants are located in California, Texas and Berlin.
Tesla sources more than 95 per cent of components for its âChina-made vehicles locally, relying on a network of more than â400 domestic suppliers, according to Tao. More than 60 of those suppliers also serve Tesla’s global operations, she said.
The deep localisation of its supply chain has helped Tesla lower manufacturing costs and reduce exposure to global logistical disruptions.
Its China-made vehicle deliveries rose for an eighth consecutive month in June, helped by demand in overseas markets including Europe. Second-quarter sales from âthe Shanghai factory, including exports, increased by one third from a year ago.
Local production helped Tesla establish an early lead in âChina’s premium EV âmarket.
China was Tesla’s second-largest market â after the United States by revenue in 2025 and the Shanghai-built Model Y has been one of the country’s best-selling passenger vehicles across all fuel type.
However, Tesla has faced intensifying âcompetition from Chinese automakers since entering the market in 2019. Domestic rivals have narrowed the technology gap, while benefiting from integrated supply chains, faster product development cycles and aggressive pricing.
BYD has emerged as one of Tesla’s biggest rivals in EV market, alongside a growing group of Chinese EV makers including Xiaomi, Xpeng and Li Auto.
