Tesla’s Giga Shanghai Hits 5 Million Battery Pack Milestone As China Sales Crater To 3-Year Low

Tesla’s Shanghai Gigafactory reached a significant manufacturing milestone on November 12, 2025, producing its 5 millionth battery pack since operations began in late 2019. The achievement highlights the factory’s role as Tesla’s highest-volume manufacturing complex, yet it arrives amid the company’s worst domestic sales performance in China in three years.

The milestone celebration at Giga Shanghai featured factory workers posing with the commemorative 5,000,000th battery pack, with Tesla announcing the achievement on both X and Weibo. Tesla Senior Vice President Tom Zhu congratulated the team, writing “Power up, team!” in response to the announcement.

Production Milestone Masks Domestic Sales Crisis

While Tesla’s manufacturing prowess remains undeniable, the timing of this celebration exposes a harsh reality: Giga Shanghai increasingly serves as an export hub rather than a gateway to Chinese customers. Tesla’s retail sales in China plummeted to 26,006 vehicles in October 2025, marking the lowest monthly figure since November 2022.

The October collapse represents a 35.8% year-over-year decline from 40,485 units and a staggering 63.6% drop from September’s 71,525 units. Tesla’s market share in China shrank to just 3.2% in October, down sharply from 8.7% the previous month—the company’s lowest share in more than three years, according to data from the China Passenger Car Association.

Meanwhile, exports of China-made Teslas surged to 35,491 units in October, a two-year high. The divergence reveals Tesla’s strategic pivot: use Shanghai’s manufacturing capacity to supply global markets while domestic Chinese demand evaporates.

Battery Pack Technology And Production Scale

Tesla independently develops its battery cell chemistry and designs the structural architecture of its battery packs, which combine cells from suppliers CATL and LG Energy Solution with proprietary engineering. The company states its battery systems are “designed to support mileage exceeding the vehicle’s lifecycle, with safety standards surpassing industry norms by several times,” according to its Weibo announcement.

The packs deliver high performance, superior energy density, and exceptional cold-weather resilience, Tesla said. These battery systems power the Model 3 sedans and Model Y SUVs produced at the Shanghai facility for both domestic and export markets.

Giga Shanghai began construction in early 2019, becoming China’s first wholly foreign-owned automotive manufacturing facility. The factory completed its first phase within the year, producing Model 3 sedans by December 2019. It now operates with an annual production capacity approaching one million vehicles.

Chinese Competitors Dominate Despite Tesla’s Manufacturing Edge

The stark contrast between production capability and sales performance tells a troubling story. Chinese EV manufacturer Xiaomi posted record sales of 48,654 units in October—nearly double Tesla’s domestic deliveries—despite ongoing safety controversies involving its vehicles, Reuters reported.

BYD continues to dominate China’s electric vehicle market with aggressive pricing and an expanding model lineup that appeals to cost-conscious buyers. The broader Chinese EV market has become increasingly competitive, with domestic manufacturers offering comparable technology at significantly lower prices than Tesla’s premium-positioned vehicles.

China’s overall car sales fell expectedly in October as consumer sentiment weakened amid diminished government subsidies and tax breaks. The market contraction exposes which automakers have built genuine product-market fit versus those dependent on incentives—and Tesla’s collapsing market share suggests serious problems beyond general market weakness.

Export Strategy Faces European Headwinds

Tesla’s solution to weak Chinese demand—ramping up exports from Giga Shanghai—faces its own challenges. The company’s October sales collapsed across Europe, with registrations plummeting by double-digit margins in nearly every major market during the same period as the China crisis.

From January to October 2025, Tesla China’s total sales including exports reached 667,861 units, down 10.2% compared to the same period in 2024. The pattern suggests Tesla cannot simply export its way out of the China problem when European demand is simultaneously weakening.

EVXL’s Take

This isn’t news to EVXL readers—we’ve been documenting Tesla’s China collapse throughout 2025. When we covered Tesla’s June sales breaking an eight-month decline with a modest 0.8% year-over-year increase, we called it what it was: a temporary blip, not a turnaround. The October numbers validate that analysis.

The 5 million battery pack milestone represents genuine manufacturing achievement. Building that many battery packs in under six years demonstrates operational excellence and production efficiency that few automakers can match. But manufacturing prowess means nothing when customers don’t want your product.

As we documented in our analysis of Tesla’s October wholesale decline, even BYD struggled with a 12% drop during the same period. The difference? BYD still outsells Tesla by massive margins and maintains market leadership despite the headwinds. Tesla’s 3.2% market share in China represents a spectacular fall from the company that once dominated the Chinese EV market.

The Model Y L strategy failed spectacularly, as we noted in our coverage of the retail sales collapse. Tesla generated a one-month sales spike in September when deliveries began, then demand fell off a cliff—down 63.6% in just 30 days. That’s not normal monthly variation; that’s a product nobody wanted after the initial order backlog cleared.

Compare that to Xiaomi, which maintains momentum despite fatal crashes, massive recalls, and safety scandals. Chinese consumers are buying Xiaomis faster than Teslas at nearly a 2:1 rate. When customers choose a brand facing intense safety scrutiny over Tesla’s established safety reputation, that’s not a pricing problem—that’s a product and brand problem.

The October China numbers connect directly to Tesla’s European sales catastrophe we covered last week. Sweden down 89%, Denmark down 86%, Germany down 54%—all in the same October 2025 period when China collapsed. These aren’t isolated regional problems; they’re symptoms of the same disease: stale products, damaged brand reputation, and fierce competition from manufacturers offering better value.

Tesla’s export surge to 35,491 units reveals the strategy: use Shanghai Gigafactory to serve global markets while domestic Chinese sales crater. But here’s the problem—those exports are going to European markets that are also rejecting Tesla. Where exactly are these Shanghai-built Teslas going to sell?

The irony of celebrating 5 million battery packs while posting the worst China sales in three years perfectly encapsulates Tesla’s current predicament: world-class manufacturing capability in service of declining market relevance.

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