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By Micah McCartney
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Tesla's operations in China are back in the spotlight after CEO Elon Musk dismissed a report the company may end operations in the country ahead of a possible merger with Musk's other flagship company, SpaceX.
In an X post, Musk called The Wall Street Journal article "absurdly fake news" and said the departure of Tesla—the only one of his companies with a presence in China—had "not even come up in a discussion ever."
Newsweek reached out to SpaceX and Tesla by email with requests for comment.
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Why China Matters to Tesla
Any sale, closure, separation or spinoff of its China business, which The Wall Street Journal said Tesla advisers were weighing, would have major implications for both the company and one of its most important markets.
The world's second-largest economy is also Tesla's second-largest market, despite fierce competition from Chinese electric vehicle makers such as BYD and XPeng, which have rapidly expanded by offering lower-priced models and introducing new features at a faster pace.
Tesla posted $4.7 billion in revenue from China between April and June, accounting for about 17 percent of its total quarterly revenue. China accounted for more than half of the company's global vehicle deliveries last year.
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Beyond EVs
Tesla's Shanghai factory marked a milestone when it opened its largest factory—Gigafactory Shanghai—in late 2019 as the first wholly foreign-owned car manufacturing plant in China.
This gave Tesla access to the world's most mature electric vehicle supply chains, lowering production costs, reducing shipping expenses and allowing the company to bypass tariffs on vehicle imports and serve Chinese customers directly.
The move also helped transform Shanghai into Tesla's main export hub, with vehicles built there shipped to markets across Asia and Europe.
Tesla's ambitions in China also extend beyond electric vehicles.
The company invested about 1.4 billion yuan (roughly $200 million) to build its Shanghai Megafactory, which began production of Megapack grid-scale battery systems.
These batteries are designed to store electricity for later use, allowing utilities to better manage fluctuations in demand and making energy storage a growing part of Tesla's business beyond electric vehicles.
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