On 31 July, media reported that Tesla was considering spinning off its China business, including the Shanghai Gigafactory, to clear the way for a potential merger with SpaceX, via split, sale or closure. Tesla China told Caijing the report was ‘inaccurate,’ and Musk called it fake news on X, saying the matter had ‘never even been raised before.’
The reported logic: SpaceX, a major US defence contractor, creates conflicts that a firewall between Tesla’s China unit and its US operations could resolve. Tesla has already been asked to rigorously separate US and China operations, including a standalone sales entity for Shanghai exports.
Selling Shanghai is hard to imagine. The plant runs as a wholly owned subsidiary, is the world’s largest single-site factory, and serves as the global export hub for Asia-Pacific and Europe. Localisation exceeds 95 per cent, with over 400 Chinese tier-one suppliers, more than 60 in Tesla’s global supply chain. Annual capacity tops 950,000 units, routinely over half of global deliveries.
In the first half of 2026, Shanghai delivered 468,000 vehicles, up 28.4 per cent, over 54 per cent of Tesla’s global output. On 30 July Tesla built its 10-millionth EV at Fremont; Shanghai has built over 4.5 million vehicles in six and a half years, over 45 per cent of the total.
Yet the financial picture is mixed. Second-quarter revenue rose 26 per cent to $28.2bn but net profit fell 5 per cent; free cash flow turned negative for the first time in two years as R&D rose 49 per cent and capex surged 142 per cent, mostly into AI, robotaxi and humanoids. China’s value now lies in scale, supply depth and sales, not margin.
Read the original report (Sohu IT)
Translated and adapted from Sohu IT (it.sohu.com).