Earlier this month, Musk left the door open to Tesla merging with his other trillion-dollar-plus-valued firm SpaceX, declining to dismiss the possibility and citing growing overlap between the companies.
JPMorgan analysts, however, have pointed to the "practical bottleneck" of getting regulatory approvals for both companies, particularly in China, where national security concerns over SpaceX's U.S. government ties could pose problems.
While Giga Shanghai acts as a vital export pipeline, China itself is Tesla's second-largest market globally after the United States, though it faces intense pressure from local players such as BYD.
The Journal reported that executives have also discussed creating a separate sales entity to handle exports from the Shanghai plant. Tesla could create separate office systems and bar China-based employees' direct access to other company units, it added.
SpaceX President and Chief Operating Officer Gwynne Shotwell has also acknowledged potential benefits, telling CNBC in June that folding the companies together "might make Elon's life a little easier" by streamlining management across his businesses.
Through its China entity, Tesla achieved the lowest costs to manufacture its Model 3 and Model Y with the help of more than 400 domestic suppliers, a Tesla China executive has previously said, adding that more than 60 of them also supply Tesla globally.
Deliveries of China-made Model 3 and Model Y vehicles rose 24.4% year-over-year in June, while second-quarter sales and exports from the Shanghai factory increased 32.8%.
Tesla has said it sources locally more than 95% of the components in the China-made Model 3 and the refreshed version of the Model Y.
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