Tesla's Shanghai factory posted its best-ever June, producing 93,579 cars—up 38% year-on-year—but the surge is being driven by exports rather than demand from Chinese buyers, whose purchases have fallen for over a year as interest in the Model 3 wanes. This matters because the Shanghai plant, boosted by cheap local labour, components and Chinese export tax rebates, has become one of Tesla's most valuable assets just as the company's margins shrink elsewhere, yet reports suggest Tesla executives may be preparing to separate its Chinese and non-Chinese operations.

Almost 40% of June's output was for export, and across the second quarter as a whole, more than half of the cars built in Shanghai (128,394) went to Europe, Canada and other Asian markets rather than Chinese customers (126,157). The Wall Street Journal reported that some Tesla executives have been told to work on splitting the firm's Chinese and non-Chinese businesses, though Tesla denies this; separately, new US rules banning Chinese-linked connected-car software and hardware take effect in 2027 and 2030 respectively, and Tesla has already stopped importing Chinese-made cars into the US. The article suggests trade rules aren't the main motive for any China split—rather, it may be aimed at clearing the way for a merger with Elon Musk's SpaceX, which is seeking access to passive investors after the S&P 500 refused to bend its listing rules for the rocket firm.