Investor's Corner
Tesla Gigafactory 3 seems to be preparing for the Model Y production ramp
There is a lot at stake riding in Tesla’s Gigafactory 3, the first facility of the electric car maker that would be established and operated in a foreign country. Giga 3 is set to be the first of Tesla’s next-generation Gigafactories as well, since the facility would be capable of producing both battery packs and electric cars on-site.
Tesla actually lucked out with Gigafactory 3, as it was able to secure a permit from the Chinese government to operate the facility without a local partner earlier this year. Tesla’s business license for the facility, which would be built in Shanghai, was granted to Tesla Motors Hong Kong Co., LLC, the electric car maker’s HK division, last May. The company also registered the capital for the Shanghai site at 100 million yuan, which corresponds to about $15.8 million. Interestingly, the initial filings of the company were absent of any references to battery production and electric car manufacturing.
That is, until now. A recent report from Sina Finance has noted that Tesla (Shanghai) Co., Ltd. recently registered a capital increase for its upcoming facility. The increase was significant, with the electric car maker now listing a capital of 4.67 billion yuan, which corresponds to about $680 million. Tesla Shanghai also revised its filings for the facility, mentioning references to battery separators, battery management systems, as well as electric car components such as powertrains and other electronic devices that are utilized in the company’s vehicles.
Tesla’s Gigafactory 3 would likely rival Gigafactory 1 in size once it’s completed, especially considering that the Shanghai-based facility will be producing both batteries and electric cars. Despite this, Elon Musk noted in the company’s Q2 2018 earnings call that Giga 3 would likely not cost as much as Gigafactory 1, which is expected to cost up to $5 billion once it’s complete. Musk’s initial estimate for Giga 3 is $2 billion, on account of optimizations that it learned from the Model 3 ramp.
“With respect to Gigafactory CapEx, I think we learned a tremendous amount with Gigafactory 1, and we’re confident that we can do the Gigafactory in China for a lot less. I think it’s probably closer to — this is just a guess, but probably closer to $2 billion, and that should be at a higher — and that would be sort of at the 250,000-vehicle per year rate. So I think we can be a lot more efficient with CapEx, and that would include at least a factory module and pack production, body shop, paint shop, and general assembly. Might even be less than that, but that’s about the right number for that,” Musk said.
A reporter from Beijing Business Daily noted that with the revised capital, around 30% of the funds are now ready for Tesla’s Shanghai Gigafactory. Perhaps even more notable were reports that the Shanghai government is assisting Tesla to obtain loans from Chinese banks to fund the construction of the facility.
It should be noted that Gigafactory 3 does not need to be fully completed before the facility could start building battery packs and electric cars. Gigafactory 1, for example, is less than 30% complete, but it is already supporting the demand for battery packs and powertrains from the Model 3 production ramp. The Model 3’s current production pace is no joke, either, as the company is reportedly on track to building at least 50,000 Model 3 this quarter.
With this in mind, Tesla only needs to get critical portions of Gigafactory 3 working before the facility could start producing vehicles. Such a strategy actually taps into a particularly impressive expertise of the country’s workforce, considering that China’s builders are proficient in quickly constructing modular structures. This type of construction was showcased by the country’s workforce when it completed the construction of a 57-story skyscraper in just 19 days back in 2015. If Tesla opts to adopt a similar construction method for Gigafactory 3, the facility could come alive well in time for the production of the company’s next big vehicle — the Tesla Model Y.
Elon Musk has noted that the Model Y would likely be built sometime next year. Being a crossover SUV, the Model Y would compete in one of the auto industry’s most competitive markets. The Model Y is expected to have a demand of up to 1 million vehicles per year, making it even more popular than the Model 3. Tesla has been quite tight-lipped about the facility where the Model Y would be constructed. Considering Tesla’s updates with Gigafactory 3, as well as Elon Musk’s past statements about the Model Y being built in China; there is a good chance that Giga 3’s vehicle production lines would likely be designed for the electric crossover.
Back in July, Tesla noted that it expects Gigafactory 3’s vehicle production to start roughly two years after construction begins. In true Tesla fashion, the company intends to ramp the facility’s production rate to 500,000 vehicles per year within 2-3 years. This aggressive timeline has been met by doubts in the United States, with Consumer Edge Research senior auto analyst James Albertine dubbing the company’s targets as “not feasible.” Fortunately for Tesla, its is a company that operates best when it is proving its skeptics wrong.
Investor's Corner
SpaceX’s biggest earnings test yet lands Tuesday, and Tesla shareholders should be watching
SpaceX reports earnings Tuesday as Wall Street watches AI spending, Starlink growth and Tesla merger
SpaceX reports third quarter results after the market closes Tuesday, with a webcast at 4:30 p.m. ET streamed on X, and Tesla follows a day later. Bloomberg consensus, cited by Pepperstone, calls for revenue of $12.89 billion, adjusted EBITDA of $6.62 billion and adjusted EPS near $0.15. That would be about 65% growth from the second quarter and SpaceX’s first profitable quarter since its IPO. Analysts expect roughly $6.4 billion from AI and $4.9 billion from Starlink, which is projected to reach 14.3 million consumer subscribers. Capital spending is forecast at $19.6 billion, leaving free cash flow near negative $11.6 billion.
The numbers matter because SpaceX has spent months trying to win over a skeptical market. It priced its record IPO at $135, spiked to $225.64, then sank near $105 in early August. Friday’s close of $146.03 sits about 28% below the June high. The Q2 report beat on revenue at $7.8 billion and put Starlink at 12 million subscribers, but $18.4 billion of capex hurt the stock. Since then SpaceX reached orbit on Starship Flight 14 with 26 Starlink V3 satellites, agreed to buy 800 MHz spectrum for about $8 billion as part of its Starlink Mobile push, and signed a fourth compute hosting deal in four months worth roughly $13 billion a year from December. Management is targeting more than 2 gigawatts of compute by year end and a $100 billion annualized revenue run rate. Evercore ISI, which raised its target to $275, said the quarter may be judged more on those targets than the reported figures
All of this sits under the Tesla merger question. Barclays analyst Dan Levy expects an all stock deal in which SpaceX buys Tesla at a premium, using reference values of $2.1 trillion and $1.5 trillion, and said an announcement would need to come by late October or early November to be voted on at Tesla’s December 6 annual meeting. Barclays estimates Musk would hold about 37% of the combined company and 56% of the votes. Musk said in July that combining companies cannot be discussed on an earnings call, but an investor question asking when SpaceX will merge with Tesla is sitting on SpaceX’s Q&A platform, and Teslarati has tracked how the Roadster demo revived the talk.
If a deal happens, Tuesday’s result would effectively set the price Tesla holders would receive. Their shares would convert into SpaceX stock, along with exposure to a company with a heavy investment on AI, while Tesla itself expects 2026 capex above $25 billion. A strong quarter and calmer spending would make that exchange easier to sell. Another round of heavy capex and a falling stock would make it harder.
Investor's Corner
Tesla’s flying Roadster just revealed something bigger than the car
Analysts say the Roadster demo puts a Tesla and SpaceX merger back on the table.
The Roadster unveiling near Waco ended Thursday night, and by Friday morning much of the investor reaction had less to do with the car than with who owns the rocket technology inside it.
Wedbush analyst Dan Ives said the event “puts the Tesla/SpaceX relationship on the table in a tangible way,” pointing to the propulsion, pressure vessel and control hardware sitting on a Tesla product. Gene Munster of Deepwater Asset Management called the demo “a ridiculous display of engineering” with “no commercial value” beyond embarrassing traditional automakers, though he said it showed Musk wants the two companies together.
The more specific forecast came a day earlier from Barclays. Analyst Dan Levy told clients a deal could be announced before Tesla’s annual meeting, which must happen by December 6, and that an announcement in late October or early November could make shareholder approval harder. Barclays expects SpaceX to be the buyer in an all stock deal, with Tesla holders receiving SpaceX shares at a premium, based on market values of roughly $2.1 trillion for SpaceX and $1.5 trillion for Tesla. If nothing lands around the meeting, the bank still sees an announcement within 6 to 12 months.
The Roadster demo just added more weight to merger speculations. Tesla’s demo used cold gas thrusters and pressure tanks of the kind SpaceX uses on Falcon 9, and Musk described the car as a collaboration between Tesla and SpaceX engineers, as we mentioned in our breakdown of the three Roadster configurations.
Musk has not publicly addressed a deal since the event, as far as we have seen. His most direct answer remains the one he gave at the All In Summit, when he said that with so much collaboration, “who can imagine what action one might take” without ruling anything out. Ives has held to a 2027 timeline since his March note, and Musk pushed back on the China piece of the speculation when ARK floated a year end announcement in August.
The next test is Tesla’s third quarter earnings call on October 21. However, we recall in July that Musk told analysts, “we can’t talk about combining companies and that kind of thing on an earnings call,” so a clear answer wouldn’t be expected.
Elon Musk
Elon Musk breaks his silence on the Starlink impact to Ukraine drones
Musk says the US military and president set Starshield limits, not SpaceX, amid Ukraine complaints.
Elon Musk says the speed limit cutting out Ukraine’s military Starlink terminals is not SpaceX’s decision. In a post on X Wednesday, Musk wrote that “Starshield systems are owned and controlled by the US government. Any limits on speed or usage are decided by the US military and ultimately POTUS.” He added that Starlink is a commercial service limited to civilian or defensive activities and “cannot be used for offensive military action, as doing so would be inappropriate for a commercial company.”
He was replying to Mykhailo Fedorov, Ukraine’s former defense minister, who had thanked Musk for restoring connectivity at speeds up to 160 km/h and said removing the Starshield limit entirely is “now critical for Ukraine’s defense.”
Starshield systems are owned and controlled by the US government. Any limits on speed or usage are decided by the US military and ultimately POTUS.
Starlink is a commercial service owned and controlled by SpaceX. Usage of Starlink is limited to civilian or defensive activities and cannot be used for offensive military action, as doing so would be inappropriate for a commercial company.
— Elon Musk (@elonmusk) October 14, 2026
The complaint started Tuesday night, when Ukrainian officials said military terminals began losing service above roughly 100 mph. Presidential adviser Serhiy Beskrestnov said the defense forces got no warning and several missions were disrupted, as Teslarati reported earlier Wednesday. The 7th Rapid Reaction Corps told Reuters connections dropped for 10 to 20 seconds at speeds well below the limit, which made drones harder to control. Poland’s foreign minister, Radoslaw Sikorski, asked Musk on X whether he is “playing politics with your products again.”
That is why the Starlink and Starshield distinction matters. SpaceX introduced Starshield in 2022 as the government version of Starlink, with an initial focus on Earth observation, communications and hosted payloads. It won a Space Force contract in 2023 with a $70 million ceiling. In December 2024, the Pentagon moved Ukraine’s terminals onto Starshield, covering about 3,000 units across two contracts. Ukraine’s military connections therefore run through a service that Musk now says sits under Washington’s control.
While Musk’s post describes who holds authority, it does not infer that anyone ordered the limit, and neither SpaceX nor the US government has confirmed who set it. Ukrainian officials have pointed to the timing, which follows President Trump’s push for an energy ceasefire and Musk’s Saturday post that “Zelensky has gone too far.” The BBC noted Trump denied threatening to restrict intelligence sharing with Kyiv, and no evidence has been presented that Washington requested the cap.
The episode also revives a promise from 2025. After Poland accused him of threatening Ukraine’s access, Musk said Starlink “will never turn off its terminals” and would not be used as a bargaining chip. Poland has since supplied more than 29,000 terminals to Ukraine. Teslarati also covered Kyiv’s search for Starlink alternatives in 2025, and the latest dispute gives that search new urgency.
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