Tesla: rumours of a spin-off plan in China ahead of a merger with SpaceX
The WSJ reports this, but CEO Elon Musk denies it: ‘Fake news’ – A bumpy ride, but the ties between the two companies are growing ever closer
Tesla is considering a potential spin-off of its Chinese operations to pave the way for a possible merger with SpaceX. This is reported by the Wall Street Journal, which states that some Tesla executives have been told to prepare for such a possibility. Tesla’s advisers are considering a number of options, including a spin-off, the sale or the closure of its Chinese operations, according to the newspaper.
Tesla’s CEO, Elon Musk, stated in a post on the social media platform X that this was ‘fake news’, whilst, separately, a spokesperson for Tesla China said that it was ‘false information’.
Spinning off Tesla’s Chinese operations — which include a key plant in Shanghai, accounting for more than half of the carmaker’s global production — would be a necessary step prior to any merger, given SpaceX’s work as a major US defence contractor and its critical role in NASA’s project to send a new crew to the Moon.
But it would be a complex undertaking. The car factory is deeply integrated into China’s vast electric vehicle supply chain and has enabled Tesla to reduce costs, expand production capacity and supply vehicles to markets around the world. China also remains Tesla’s largest single market outside the United States in terms of revenue, and the country is one of the world’s most important hubs for electric vehicles, batteries and autonomous driving technologies.
The company’s industrial footprint extends beyond cars. Tesla also operates a battery storage facility in Shanghai, which serves as a high-margin hub for exporting units to Europe, the Asia-Pacific region and the Middle East. A similar dynamic governs its next-generation hardware: whilst the artificial intelligence models for Tesla’s robotaxis and Optimus humanoid robots are developed in the United States, their physical hardware relies heavily on China’s precision manufacturing ecosystem. Any attempt to spin off Tesla China would, moreover, face significant regulatory hurdles. A deal would require approval from multiple authorities and could involve negotiations on manufacturing licences, land agreements, supply chain relationships, employment commitments and data regulations. It could also potentially upset Chinese officials, who gave Tesla a red-carpet welcome when they granted the car manufacturer approval to build its factory in Shanghai.
