Elon Musk has forcefully pushed back against a report claiming Tesla is laying the groundwork to separate its Chinese operations to pave the way for a potential merger with SpaceX.
According to a report by The Wall Street Journal, sources familiar with internal discussions said Tesla advisers and executives have been exploring options to carve out the company’s Chinese business. The report claimed that Musk previously instructed executives to maintain a clear boundary between Tesla’s American and Chinese operations to ensure the U.S. side could survive any escalating geopolitical conflicts between Washington and Beijing.
The Journal reported that Tesla advisers have discussed several potential paths for the Chinese division, including a spinoff, a direct sale, or even closing the operation. Other strategies allegedly under consideration included setting up a distinct sales entity to handle international exports out of Gigafactory Shanghai, as well as splitting IT systems to restrict direct data sharing between Chinese employees and teams in other regions.
Speculation surrounding a potential tie-up between Tesla and SpaceX has grown in recent months, but operating in China creates significant geopolitical hurdles for such a deal. SpaceX is a primary defense contractor for the U.S. government, handling sensitive national security launches and satellite programs. Meanwhile, Tesla owns and operates its Shanghai plant outright, relying heavily on local supply chains and making China its second-largest market as well as its main export hub for overseas shipments.
Following the publication of the report, Musk took to X to vehemently refute the claims. “This has never even come up in a discussion ever,” Musk posted on X. “Absurdly fake news. People should assume news is fake until proven otherwise.”
Representatives for Tesla China also labeled the reports false, reiterating that the Shanghai facility remains a vital pillar of the EV maker’s global production and export strategy.
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