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Tesla and SpaceX are teaming up to build a new advanced chip factory in Texas called Terafab. The project involves an initial investment of about 16.8 billion dollars. This move shows how critical custom chips have become for both companies, as Tesla needs massive computing power to train its self-driving software and SpaceX requires it for its satellite and rocket systems.

By building its own chips, Tesla can reduce its reliance on outside suppliers and design hardware specifically for its AI models. This is a significant long-term bet on vertical integration, which is when a company owns its entire supply chain to control costs and speed up development. While the spending is large, it secures the hardware foundation Tesla needs to reach its goals in autonomy and robotics.

European regulators are keeping safety data for Tesla’s Full Self-Driving system private. The Netherlands approved the software four months ago and is now encouraging other countries in the European Union to do the same. This system uses cameras and artificial intelligence to steer, brake, and accelerate cars on its own.

This is a win for the company because Europe has traditionally had much stricter rules for automated driving than the United States. If regulators continue to support the software and keep specific safety data out of the public eye, it clears a major hurdle for Tesla to sell its high-margin self-driving subscriptions to millions of drivers across the continent.

Source: Reuters

SpaceX has ramped up its spending on Tesla Megapacks, which are large-scale battery systems used to store energy for power grids. The rocket company spent 295 million dollars on these units in the second quarter alone, bringing its total spending with Tesla to 329 million dollars for the first half of the year.

While Tesla is best known for cars, its energy storage business is becoming a more important contributor to its total revenue. This relationship with SpaceX provides a steady, high-value customer for Tesla's industrial batteries, helping to prove the technology's reliability for large-scale infrastructure projects.

Sales of vehicles made at Tesla's China factory grew about 38 percent in July compared to the same time last year. This marks nine consecutive months of growth in a region that is critical for the company's manufacturing efficiency and overall volume.

While the company has faced increasing pressure from local rivals like BYD, these numbers show that demand for Tesla's older models remains steady in the world's largest electric vehicle market. Maintaining this pace is vital because the high volume from the Shanghai plant helps lower the average cost of every car Tesla builds globally.

Source: Reuters

BYD, the Chinese carmaker that recently overtook Tesla in total electric vehicle sales, is continuing to ramp up its volume. This growth is being driven by strong demand outside of China and the rollout of new battery technology that allows for faster charging.

While Tesla is pivoting its focus toward autonomous software and robotics, its core car business remains the primary source of cash. Continued expansion by low-cost rivals like BYD puts pressure on Tesla's profit margins and market share, making it harder for the company to fund its expensive AI ambitions.

Source: Proactive Investors - Finance