Over the past few days, an online rumor surfaced claiming that Tesla was planning to sell its Chinese business, swiftly capturing widespread attention on the internet. On July 31st, Musk himself addressed the issue. What exactly transpired?

The rumor originated from a recent report by foreign media, which stated that Tesla was considering the divestiture of its Chinese operations, driven by the need to clear regulatory hurdles for a potential merger between Tesla and SpaceX. Additionally, the media outlined several potential scenarios: one involved spinning off the Chinese business independently, another entailed selling it as a whole, and a third, in extreme circumstances, involved scaling back and shutting down operations, with some executives being asked to prepare contingency plans in advance.

The report seemed credible, which is why it drew attention from across the industry. In response, some media outlets engaged in extensive speculation, debating whether SAIC or Xiaomi would be more suitable candidates to acquire Tesla's Chinese business if it were to be sold.

From the perspective of these media outlets, SAIC and Xiaomi represent a leading local state-owned enterprise and a new force in car manufacturing with a robust ecosystem and online presence, respectively. While onlookers were enthusiastically discussing Tesla's potential future, Musk intervened.

On July 31st, Tesla CEO Musk posted on a social media platform, stating that the news was false. Tesla's official response also confirmed its inaccuracy.

As a leading global automaker of pure electric vehicles, Tesla has been deeply entrenched in the Chinese market for many years, with China being Tesla's most crucial global market. Since the delivery of the first domestically produced Model 3 from Tesla's Shanghai Gigafactory in 2019, the factory has accumulated over 4.5 million deliveries in six and a half years. This accounts for more than 45% of Tesla's global total production, making it Tesla's largest global export hub.

Publicly available data also reveals that over half of Tesla's globally popular orders are fulfilled by the Shanghai Gigafactory. In the first half of this year, cumulative deliveries from Tesla's Shanghai Gigafactory reached 467,900 units, accounting for 55.8% of the global total consumption. Apart from Asia, Tesla models in Europe, Australia, and the Asia-Pacific region are also sourced from Tesla's Shanghai Gigafactory.

Leveraging the mature new energy supporting industries in the Chinese market, the localization rate of Tesla Shanghai Gigafactory's components has surpassed 95%. From a production cost perspective, it is also significantly lower than Tesla's factories in North America and Berlin. As of now, the annual production capacity stands at approximately 950,000 units.

All this underscores one point: Given Tesla's current circumstances, there is simply no possibility of packaging and selling or shutting down its Chinese business.

Moreover, in the past two years, Tesla's emphasis on the Chinese market has continued to grow. The Tesla Model YL developed in China is not only sold domestically but has also officially launched in the U.S. market, with a strong likelihood of entering the European market in the future. Meanwhile, in China, Tesla has also expanded its Megapack energy storage factory.

If you were Musk, would you consider selling Tesla's Chinese business? The answer is a resounding no.

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