Tesla's Shanghai factory had a record June, but the company is preparing for life with less China
Tesla built a record 93,579 cars in Shanghai in June, but most of the increase went to export as Chinese sales keep falling. The company is also moving to cut its dependence on Chinese-made cars and parts for the US market.
Tesla's factory in Shanghai posted its best June ever, according to data from the China Passenger Car Association. The plant built 93,579 cars in June, up 38 percent from the same month last year.
However, that record output is not being driven by strong Chinese demand. Sales in China have declined quarter over quarter for more than a year, and the Model 3 sedan in particular has lost appeal. Nearly 40 percent of the electric vehicles built in June were headed for export, and in the second quarter more than half of all Shanghai-made Teslas went to Europe, Canada and other Asian markets: 128,394 vehicles, compared with 126,157 sold to Chinese buyers.
The Shanghai plant remains extremely valuable. Labor costs are lower than in Germany or the United States, local suppliers offer cheaper components, and the Chinese government provides export-related tax rebates. That helps Tesla at a time when profit margins are shrinking.
Still, Tesla may be thinking about a future with less China involvement. The Wall Street Journal reported last week that some Tesla executives have been asked to separate the company's Chinese and non-Chinese operations, though Tesla denied that preparations are underway.
The automaker is also working to reduce its reliance on China for cars sold in the United States, its largest market. New US rules banning Chinese-linked connected-car software take effect for model-year 2027 vehicles, and a similar ban on hardware will apply from model-year 2030. Tesla has already stopped importing Chinese-made cars for US sales and has been cooperating with North American suppliers to ensure that components do not have unwanted Chinese origins.
