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]
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.
Investor's Corner
Tesla Robotaxi gets a massive upgrade in Nevada
Nevada regulators just approved a massive expansion of Tesla’s robotaxi fleet across the entire county.
Tesla’s robotaxi footprint in Nevada just grew by roughly 500 times in a single regulatory vote.
The Nevada Transportation Authority approved Tesla’s full Autonomous Vehicle Network Company permit on Thursday, clearing the way for the company to deploy up to 5,000 driverless vehicles across Clark County over the next 12 months. The decision came during a four hour general session meeting that Tesla investor Sawyer Merritt watched live and reported on X, noting the vote replaces the interim order that had limited Tesla to just 10 robotaxis on a narrow stretch of the Las Vegas Strip.
EXCLUSIVE: Tesla has just officially received approval for its full Autonomous Vehicle Network Company permit in Nevada, clearing the way for Tesla to launch a paid public Robotaxi service in Las Vegas.
This officially allows @Tesla to deploy up to 5,000 robotaxis over the next… pic.twitter.com/DPs5UtUlrE
— Sawyer Merritt (@SawyerMerritt) August 20, 2026
That earlier cap, covered here after it surfaced on August 13, came with restrictions that looked stricter than what Tesla runs in Austin: a 45 mph speed ceiling, no airport pickups, and a geofence confined to the Strip corridor. The new approval extends Tesla’s operating authority to all of Clark County, with room to request an even wider geofence across the state.
Tesla representatives at the meeting said they have no intention of putting 5,000 cars on the road right away. Commercial rides are expected to start within 30 days, pending vehicle inspections, insurance filings, and fare approval, the standard steps every robotaxi operator in Nevada has had to clear.
Tesla’s own Robotaxi account replied to the news with a short line, The golden future is upon us.
The timing lines up with Tesla’s broader robotaxi push this month. The company is preparing to open Cybercab rides to the public in Austin as soon as this month, and it opened a sweepstakes for riders to win a seat at the launch event. Tesla filed its original application for a 5,000 vehicle Nevada fleet back in June, a request regulators trimmed to 10 vehicles when they issued the interim order in July. Thursday’s vote effectively grants the number Tesla asked for from the start.
Zoox, the Amazon owned robotaxi operator, has run in Nevada since 2025 and was capped at 100 vehicles before Thursday’s decision. Tesla’s new ceiling puts it well ahead of that comparison on paper, though the company has said its actual fleet size will depend on how quickly FSD v15 rolls out, the software update executives have called the gateway to scaling unsupervised robotaxi operations nationwide.
Elon Musk
SpaceX’s next trillion dollar bet has nothing to do with rockets, Musk tells staff
Elon Musk told SpaceX staff AI revenue will soon dwarf rockets and Starlink combined entirely.
Elon Musk told SpaceX employees this week that artificial intelligence, not rockets, will soon carry the company’s revenue. In a roughly 29 minute internal address posted on SpaceX’s X account on Tuesday, Musk said AI revenue will pass every other line of business at SpaceX “probably in September” and pull further ahead by the fourth quarter.
The numbers he gave are specific. SpaceX currently runs 1.4 gigawatts of AI compute capacity. Musk wants that at 10 gigawatts by the end of 2027, a jump he tied directly to revenue: “if we bring 10GW of AI online by the end of next year, it will be $300 billion to $500 billion a year in revenue.” He called those “big numbers,” which undersells a projection larger than what most countries produce in a year.
We made rockets reusable and are rebuilding the internet in space. The next challenge: making life multiplanetary and understanding the true nature of the universe
Watch @ElonMusk deliver a company update to @SpaceX employees pic.twitter.com/5c8rxoCQfu
— SpaceX (@SpaceX) August 11, 2026
Musk went further on where AI fits into SpaceX’s future. “Probably in four or five years, AI will be 99% of the value of SpaceX,” he told staff, adding that digital intelligence would eventually run “a trillion times” ahead of biological intelligence as computing scales. He tied that growth to the company’s founding mission, telling employees “we must win on AI, because the future is overwhelmingly AI and robots,” with the payoff meant to help fund Starship and a Mars program that increasingly runs through Terafab, the joint Tesla, SpaceX and xAI chip plant.
Elon Musk launches TERAFAB: The $25B Tesla-SpaceXAI chip factory that will rewire the AI industry
None of this is entirely new territory. SpaceX told investors much the same story during its first earnings call as a public company on August 4, where Musk moved the company’s $1 trillion revenue target up a year to 2030 and said Starlink could someday carry a majority of the world’s internet. What the all hands video adds is a hard deadline and a specific power figure Musk had not given publicly before, along with a franker pitch to his own workforce that AI, not launch cadence, is now the thing SpaceX is betting its future on.
The AI revenue itself is not coming from SpaceX training its own models. It is largely Starlink acting as the network layer for xAI’s workloads, plus SpaceX renting out compute capacity directly, the same approach behind the roughly $16 billion the company spent on AI infrastructure in a single quarter.
Musk closed the video with a pitch aimed at recruiting and retention rather than investors, telling employees that anyone who helps SpaceX win the AI race will eventually get the chance to go to the moon or Mars themselves. Whether SpaceX can turn 1.4 gigawatts into 10 in seventeen months is the more immediate question, and one that will show up in quarterly numbers well before anyone leaves Earth.
In a new note to investors on Tuesday, Morgan Stanley analyst Andrew Percoco said that Tesla has one big financial question to answer for investors regarding its Robotaxi rollout, Full Self-Driving software, and Optimus.
Percoco said in the note that, for the most part, investors are still very positive about the direction the company is headed. However, there are some things the firm would like to see, and they have to do with financials.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Tesla bulls are more than convinced that the company’s Full Self-Driving software is proof it can develop physical AI. Financially, however, there are still some questions, especially on elevated spending, which CEO Elon Musk said would occur as the company works to roll out Robotaxi faster and continue developing its Optimus robot.
The latter two are where Tesla will have to prove progress to investors, as Percoco writes that both projects “will require clearer evidence that Robotaxi is scaling and more tangible Optimus proof points to support the ROI on elevated capex.”
Percoco said the second quarter earnings call did not change his long-term thesis of where Tesla is positioned in the AI race, which is out in front. However, there are concerns that weaker gross margins and higher R&D spend will stress financials, and that has “sharpened our (and investors’) focus on measurable progress across Robotaxi and Optimus.”
Additionally, Robotaxi still needs to be proven with more operation in existing cities while maintaining safety but improving how many rides it gives in any given time, he said. For Optimus, Percoco wrote that he is “still looking for evidence beyond commentary around SOP.”
Morgan Stanley put Percoco in charge of covering Tesla after long-time analyst Adam Jonas transitioned to the automotive side.
Currently, Morgan Stanley has a $415 price target on Tesla and a ‘Hold’ rating on the stock. It is trading at around $330 at the time of publication, which was 2:30 P.M. on the East Coast.
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