Tesla's Shanghai plant reached record production levels in June, but the company is increasingly relying on exports as domestic sales in China continue to fall.

Tesla's Shanghai factory produced 93,579 vehicles in June, marking a 38 percent increase over the same month in 2025, according to the China Passenger Car Association. Despite this record production, domestic sales in China have declined quarter-over-quarter for more than a year, leading the company to export a significant portion of its Chinese-built inventory.

Export Reliance and Production Costs

In June, nearly 40 percent of the vehicles produced at the Shanghai facility were designated for export. During the second quarter, Tesla exported 128,394 vehicles to markets including Europe, Canada, and other parts of Asia, surpassing the 126,157 units sold to Chinese customers. The Shanghai plant remains a valuable asset due to lower labor costs, affordable local components, and Chinese government tax rebates.

Reducing Dependency on Chinese Supply Chains

Tesla is actively working to reduce its reliance on Chinese components for vehicles sold in the United States. The company no longer imports Chinese-made cars for the U.S. market and is auditing its North American supply chain to ensure components lack Chinese origins. This shift follows new U.S. regulations that ban Chinese-linked connected car software for model-year 2027 and will restrict Chinese-linked hardware by model-year 2030.