Tesla's solar dream may be keeping China's solar industry up at night.

Tesla's solar superfactory is emerging.

Recently, Tesla submitted tax credit application documents to the Texas state government, bringing its solar manufacturing project, codenamed "Crystal Solar," into the public eye.

The documents show that Tesla plans to build a vertically integrated solar power plant in Fort Bend County, Texas. The production lines will include silicon ingot pulling, wafer cutting, battery coating, metallization printing, battery testing and quality control, cleanrooms, automated logistics, and a full range of chemical support facilities.

The project will reportedly cover approximately 3,050 acres, with a total investment of $10.1 billion (approximately RMB 68.1 billion), including $8.6 billion in production equipment and related movable assets, and $1.5 billion in fixed assets. The construction period is from 2026 to 2028, with a target of commercial production in the first quarter of 2029.

At the Davos Forum in January of this year, Musk revealed plans for Tesla and SpaceX to each build 100GW annual capacity solar factories in the US over the next three years, totaling 200GW.

Now it seems Musk is getting closer to this goal.

Investing $10.1 billion to cover the entire photovoltaic industry chain

In the past two years, a very obvious feeling is that the US photovoltaic industry is accelerating its decoupling from China.

From the IRA's tax credit for domestic manufacturing, to the FEOC's restricted entity rule, and then to Section 232 trade provisions introducing minimum import prices and additional tariffs, a series of barriers have been implemented, with a very clear goal: to incentivize domestic factory construction and reduce reliance on imports from overseas photovoltaic industry chains.

However, reality often differs from policy planning. Aggressive decoupling actions have instead had a strong backlash and impact on the development of the US photovoltaic industry itself.

Currently, the vast majority of new photovoltaic capacity in the US is concentrated in the end-module packaging stage. Expansion in silicon materials, wafers, and cells is severely lagging. Truly vertically integrated domestic capacity remains scarce.

The reason for this predicament is that China holds an absolute dominant position in the core manufacturing stages of the global photovoltaic industry. Currently, my country's global market share in the four core stages—polysilicon, wafers, cells, and modules—exceeds 80%, with a near monopoly in the polysilicon sector.

my country possesses a complete photovoltaic (PV) industry cluster, mature technology, and a significant cost advantage—a competitive barrier that the United States cannot replicate in the short term.

This also means that the US's current push to decouple its PV supply chain essentially deviates from the optimal global industrial configuration. Not only will it fail to achieve rapid self-sufficiency, but it will also hinder the development of its domestic new energy industry.

This structural contradiction is felt even more acutely by companies. Since acquiring SolarCity in 2016 and entering the PV market, Tesla has long relied on purchasing components and rebranding them, failing to establish sufficient manufacturing capacity. Its Buffalo, New York PV factory has an annual capacity of only around 300MW.

As US trade barriers continue to escalate, Tesla's long-standing reliance on external procurement has become glaringly apparent. Insufficient stability in overseas supply, continuously rising import costs, and restrictions on cross-border policy access are among the series of problems that continue to impact Tesla's new energy business.

It is precisely under the dual pressure of a fragmented domestic industrial chain and disrupted external supply chains that Tesla is pushing forward with its "Crystal Solar" photovoltaic project. This carries special significance far beyond the commercial level. It is both a self-rescue strategy for the company to address manufacturing shortcomings and hedge against supply chain risks, and a crucial exploration for the US photovoltaic industry to overcome its structural predicament.

Ambitions Beyond Photovoltaics

If we only look at the expansion logic of the photovoltaic industry, it's easy to draw a simple conclusion: Tesla wants a share of the global photovoltaic market. But a closer look reveals a more complex picture.

Tesla's starting point has never been to become a traditional photovoltaic manufacturer. For Musk, photovoltaic manufacturing is a key infrastructure supporting intelligent manufacturing and AI computing power, while also linking with the aerospace business. This is the root of his confidence in setting a target of hundreds of gigawatts.

First, building its own photovoltaic production capacity can provide energy support for Tesla's computing power and manufacturing. With the rapid expansion of its AI computing data business, Tesla's electricity consumption is constantly rising, making the acquisition of stable and inexpensive clean energy crucial.

Once Tesla's photovoltaic (PV) production capacity reaches its target, it can prioritize meeting the electricity needs of its Gigafactory and computing centers, achieving self-sufficiency in green electricity for the factory area, offsetting grid price fluctuations, and forming an energy closed loop from PV power generation and energy storage peak shaving to end-user electricity consumption. Surplus capacity can be released to the market to generate revenue.

Secondly, it addresses the shortcomings of integrated PV and energy storage. Tesla's Megapack and Powerwall energy storage products have considerable global sales, but its PV modules have long relied on external purchases, making it difficult to achieve deep synergy between PV and energy storage products.

If Tesla can master the entire PV manufacturing chain, it can develop customized PV products for different application scenarios, transforming itself from merely an equipment integrator into a comprehensive energy solutions provider.

Looking deeper, this ground-based manufacturing capability can also pave the way for SpaceX's space-based PV. The traditional aerospace field generally uses high-cost triple-junction gallium arsenide (GaAs) batteries, and existing manufacturers only have an annual production capacity of megawatts, which is far from sufficient to support the needs of large-scale low-Earth orbit satellite constellations. Previously, Starlink satellites relied on externally sourced photovoltaic cells. However, with satellite iterations and the implementation of orbital AI computing power plans, the demand for lightweight, radiation-resistant batteries has rapidly increased.

Currently, SpaceX has applied to build a dedicated 10GW-scale battery factory at its Bastrop site in Texas, specifically to supply space-grade photovoltaic cells for Starlink satellites and orbital data centers. Meanwhile, Tesla's mature technologies, such as ultra-thin silicon wafers and radiation-resistant batteries, validated on the ground, can be directly supplied to SpaceX's space production lines in the future.

How can Chinese photovoltaic companies cope with formidable competitors?

Tesla's plan to build an integrated photovoltaic factory in the US presents a significant challenge for Chinese photovoltaic companies.

In recent years, every round of containment measures against Chinese photovoltaic companies in the US market has essentially been about blocking. Anti-dumping and countervailing duties, Section 201 investigations, Section 337 investigations, and various tariff policies have all aimed to keep Chinese products out.

But Tesla isn't blocking; it's proactively replacing Chinese companies. By establishing a vertically integrated production capacity in the US, Tesla is gradually replacing the role of Chinese photovoltaic companies in the US market, giving the US a domestic option that can compete fully with Chinese products in terms of performance and supply chain stability.

While Tesla's production ramp-up won't be smooth sailing, it has the confidence to experiment gradually.

Traditional photovoltaic companies rely on a single business for profit, have low tolerance for error, and are unable to withstand long-term losses. Tesla is different. It can rely on the stable cash flow from its new energy vehicle and energy storage businesses to support its photovoltaic operations, and even the capital injection from SpaceX's aerospace business can provide further financial support.

Tesla's entry into the market may not necessarily disrupt the global photovoltaic landscape, but its emergence signifies a shift in the US photovoltaic industry from a passive defense reliant on trade barriers to a proactive offensive based on domestic manufacturing.

The cost, production capacity, and technological advantages that Chinese photovoltaic companies once prided themselves on are no longer sufficient to cope with the new round of industry competition. Only by proactively transforming and developing, diversifying their business portfolios, and optimizing their overseas expansion strategies can the industry maintain its advantages and achieve sustained breakthroughs in the new global supply chain landscape.