Investor's Corner
Tesla’s China factory can’t arrive soon enough amid escalating US-China trade war
Amidst the escalating trade war between the United States and China, American automakers such as Tesla have become the first victims of renewed, hefty tariffs on US-made products entering the country. In response to the 25% duties imposed by the United States government on $34 billion worth of Chinese imports last week, China has decided to strike back by placing a 40% levy on vehicles made in America.
The latest tariffs have forced Tesla to raise the prices of its Model S luxury sedan and its Model X SUV by 150,000 yuan ($22,647) to 250,000 yuan ($37,744). With the new duties in place, a fully-loaded Tesla Model S P100D now costs 1.47 million yuan ($221,937) in China, a far cry from the $147,000 price of the vehicle in the United States.
The latest tariffs come at a time when China implemented a reduction of its import duties for foreign-made vehicles from 20-25% to 15%. On the heels of the Chinese government’s announcement earlier this year, the response from Tesla’s customer base in the country was immediate. In Tesla’s Shanghai gallery alone, prospective buyers cleared out the store’s entire Model X 75D inventory in 24 hours after it was announced that the price of the vehicle would be reduced by $11,000 after the 15% tariffs were implemented.
While it is unfortunate to see the ongoing trade dispute between the United States and China once more affecting the prices of Tesla’s vehicles in the country, it is pertinent to note that even with hefty taxes placed on its electric cars, Tesla was fighting the good fight in China, and it was still thriving. The company, after all, established its presence and its reputation under an environment where its cars were priced far beyond its local competition.
Tesla’s story in China is one that showcases the learning curve that the California-based electric car and energy company continues to go through. Tesla began taking pre-orders for the Model S in China in August 2013. At that point in Tesla’s history, CEO Elon Musk was not even sure how much the production vehicle would cost. Deliveries were also expected to be eight months away. Anticipation among Chinese buyers, however, were high nonetheless, thanks to a combination of factors including Elon Musk’s rockstar status, as well as talks about the vehicle’s performance and supercar-worthy acceleration. Pre-orders for the Model S topped 5,000 that year.
Unfortunately, Tesla was not able to support these first Model S owners properly. Due to miscalculations on its business strategy, Tesla ended up with a lot of disgruntled Chinese owners. One Model S buyer even made national news after he smashed the windshield of his own Tesla after the car arrived months later than expected. To top it off, the Supercharger network, widely considered as Tesla’s ace in the electric car industry today, was still in its infancy then, and China only had a small system centered around key cities. Things changed, however, on January 2015, when Elon Musk flew to China and met with President Xi Jinping. Musk also admitted to Tesla’s “earlier mistakes,” stating that he was nonetheless “very optimistic” about the company’s chances in the country. Tesla also attended the Shanghai Auto Show, sparking more interest in its electric vehicles.
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- Tesla’s grand opening of its Changsha, China store. [Credit: @vincent13031925/Twitter]
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- Credit: Dennis Chang via Twitter
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- Tesla’s grand opening of its Changsha, China store. [Credit: @vincent13031925/Twitter]
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- Tesla’s grand opening of its Shenzhen, China store. [Credit: @vincent13031925/Twitter]
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In the months that followed, Tesla expanded its Supercharger network, curbing the “range anxiety” of China’s electric car owners. Word-of-mouth about the company’s non-dealership sales model also started spreading. Tesla’s business in China experienced a massive boost when it introduced the Model X as well, considering the country’s obsession with SUVs. Government regulations, such as Shanghai’s electric-car friendly license plates gave even more benefits to Tesla. By the end of 2017, Tesla had already opened the largest Supercharger in the world in Shanghai. The company’s sales in the country in 2016 also helped boost its revenue enough to join the Fortune 500 list for the first time.
With Tesla’s history in mind, the renewed tariffs from the United States and China’s ongoing trade dispute could actually have little effect on Tesla’s overall operations in the country. The new duties will result in lost sales — that much is a given — but Tesla’s pedigree as a luxury automaker that makes cars that are the ultimate status symbols in China remain undaunted.
Tesla’s approval for its China site from the Central Committee of the Communist Party of China. [Credit: vincent13031925/Twitter]
Tesla, after all, has not really started its mass market push in China. The Model 3 and the Model Y, the company’s two vehicles that are targeted to dominate in the midrange segment, have not arrived in the country as of yet. With Elon Musk confirming during the Q1 2018 earnings call that the next Gigafactory will be in China, and that the facility will incorporate vehicle production, the solely-owned factory should allow Tesla to avoid the import taxes imposed on its upcoming, more budget-friendly vehicles — trade war or no trade war.
Tesla’s China Gigafactory is expected to be the site where the electric car maker will manufacture the Model Y crossover SUV, as well as some of the Model 3. Both vehicles are targeted towards the mass-market, with Tesla estimating that the Model Y could see a demand of up to 1 million vehicles per year. With the Model Y and Model 3, Tesla could compete in China not only in the luxury segment, but on the more lucrative and more competitive midrange market as well. For now, however, Tesla’s efforts to establish its own factory in China seems to be going well, with the company being granted a final approval for its solely-owned electric car facility by the Central Committee of the Communist Party of China.
SpaceX stock did the opposite of what most of Wall Street expected this week, when the day designed to be its most dangerous turned into a rally, and the rally kept going.
Thursday marked the first major lockup expiration since SpaceX’s June IPO, making roughly 911.5 million insider held shares eligible to trade for the first time, more than doubling the company’s public float. Analysts and short sellers had spent weeks bracing for a flood of selling, especially after the stock fell 13 percent following its first earnings report as a public company on Tuesday. Instead, shares rose 6.1 percent Thursday to close at $114.92, and by Friday they were trading near $129, up more than another 12 percent on the day.
SpaceX shorts get warned by Musk ally, echoing Tesla’s early struggles
The setup made the outcome notable. Short interest had climbed to roughly 34 percent of the float heading into earnings, among the highest of any large cap stock, with about 95 percent of available shares to borrow already on loan. CEO Elon Musk warned short sellers twice in the weeks before the lockup, writing on X that “the survival probability of firms who maintain a significant short position in SpaceX over time is very low,” then following up on the morning of earnings with “I try to warn them, but they just double down.”
When the newly unlocked shares hit the market and the selloff never showed up, some of that short position appears to have started unwinding. TipRanks reported that options activity shifted toward bullish strategies like put selling and risk reversals following the rally, with roughly $600 million in options premium trading Thursday alone. Retail buyers also stepped in during the earnings dip, according to Vanda Research.
The fundamentals behind the stock have not changed much in a week. SpaceX’s revenue nearly doubled year over year to $7.8 billion, with Starlink subscribers doubling to 12 million and the company’s AI segment growing 247 percent. What spooked investors on Tuesday was the spending side. Capital expenditures jumped to more than $18 billion for the quarter, up from $2.8 billion a year earlier, with AI investment alone rising from $749 million to $15.8 billion. Wall Street remains split on whether that spending is building infrastructure SpaceX needs or outrunning what the business can currently support, a debate Teslarati has tracked since shares first came under pressure.
None of that resolves the bigger question hanging over the stock. Thursday’s release was only the first of nine staggered lockup tranches, with roughly $800 billion worth of additional shares scheduled to become eligible through October, and Musk’s own stake stays locked until next June. If this week is any indication, the market is treating that supply as something it can absorb rather than something to fear, at least for now.
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Cybertruck
Tesla Cybertruck production snaps back after ugly supplier fight
Cybertrucks are piling up again at Giga Texas after Tesla’s court win against a parts supplier.
Cybertruck production at Giga Texas is showing its first visible recovery since Tesla sued a supplier last month over withheld manufacturing tooling.
Aerial observer Joe Tegtmeyer flew over the Austin factory Wednesday morning and counted roughly 100 or more Cybertrucks filling the outbound lot, a sharp jump from the thin numbers seen in recent weeks. The flyover came a day after a judge granted Tesla a temporary restraining order against Angstrom Automotive Group, the parts supplier at the center of the dispute.
Tesla filed an emergency lawsuit in late July after Angstrom told the automaker it planned to close the Troy, Texas facility where Tesla’s die-cast tools, trim dies and other Cybertruck stamping equipment were housed. According to Tesla’s complaint, a shipment of 700 finished parts never left the building, and when Tesla sent representatives to retrieve its equipment, accompanied by law enforcement, they were turned away. Angstrom allegedly then asked for an extra $250,000 a week to keep operating, which Tesla’s filing described as holding its own property for ransom.
TESLA: U.S. District Judge Christopher R. Wolfe of the U.S. District Court for the Western District of Texas, Waco Division granted Tesla a Temporary Restraining Order and Writ of Replevin in its dispute with Angstrom Automotive (Case No. 6:26-cv-00477).
The order authorizes… https://t.co/E1DKcQSxMn pic.twitter.com/LR8aAiV2Og
— S.E. Robinson, Jr. (@SERobinsonJr) August 5, 2026
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The restraining order gives Tesla immediate right of entry to Angstrom’s facility to recover the tooling. It is temporary, with a fuller hearing still to come, but the speed of Wednesday’s rebound suggests the Angstrom shortage was indeed the main bottleneck limiting Cybertruck output. Outbound lot counts are an imperfect measure of actual production, since finished trucks can sit for days before shipping, but a lot that full after a lean stretch is a meaningful signal.
Cybertruck output at Giga Texas has fluctuated all year as Tesla worked through supply issues and introduced new trims, including a cheaper Dual Motor AWD version that drew strong early demand.
Venture capitalist Chamath Palihapitiya has cautioned investors shorting SpaceX shares, drawing a direct parallel to the intense short-selling pressure Tesla faced in its early public years.
Responding to reports of elevated short interest in the newly public rocket, satellite, and AI company, Palihapitiya noted that similar dynamics played out with Tesla, where aggressive short sellers ultimately “went broke.”
SpaceX (NASDAQ: SPCX) went public on June 12, 2026, in the largest IPO on record, pricing at $135 per share. Shares quickly surged to an all-time high of $225.64 just days later, briefly implying a valuation exceeding $2 trillion. The stock has since retreated sharply amid valuation concerns, lockup expiration fears, and broader market dynamics.
By early August, it traded near $108–$125, representing a roughly 50 percent decline from the peak and bringing the market capitalization closer to the $1.5–1.7 trillion range. On August 4, shares closed up more than 9 percent at $125.33 ahead of earnings before facing pressure in after-hours and premarket trading.
Short interest has climbed dramatically. According to S3 Partners data widely cited in market reports, short positions reached approximately 219.3 million shares by late July, about 34 percent of the limited public float of roughly 640 million shares, and represented a notional value of around $24.6 billion.
Utilization of shares available to borrow hit 95 percent, with borrow fees rising. This level of shorting exceeded the dollar value of short bets against Tesla at the time and built rapidly ahead of two catalysts: the company’s first post-IPO earnings and an August 6 lockup expiration that could free up to 911.5 million additional shares.
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CEO Elon Musk has issued warnings of his own. In mid-July, as short interest approached one-third of the float, he posted that “the survival probability of firms who maintain a significant short position in SpaceX over time is very low,” reiterating his view that the company could ultimately be worth more than Earth if it achieves its goals.
On August 4, just before earnings, Musk responded to the latest short-interest data by saying, “I try to warn them, but they just double down.”
SpaceX delivered its first quarterly results as a public company after the close on August 4. Second-quarter revenue rose 92 percent year-over-year to $7.8 billion, beating consensus estimates near $6.8–6.9 billion.
The net loss narrowed to $541 million, or 9 cents per share, better than the roughly 23–24 cent loss expected. Starlink/connectivity contributed about $4.3 billion (up 66 percent), while the AI business generated $2.6 billion (up roughly 250 percent). Capital expenditures were heavy at $18.4 billion, largely tied to AI infrastructure. Management projected a $100 billion annualized revenue run rate by year-end 2026 and outlined a path toward $1 trillion in annual revenue by 2030.
The combination of Chamath’s historical reminder, Musk’s repeated alerts, and the company’s ambitious growth targets underscores the high-stakes debate surrounding SPCX. Short sellers are positioned for near-term supply pressure from the lockup, while long-term bulls point to Starlink scale, Starship progress, and AI compute expansion as reasons the bears may ultimately face the same fate as many early Tesla skeptics.
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