Tesla Chief Executive Officer Elon Musk has denied reports that the company is considering separating its China business, dismissing the claims as false.
The comments came after The Wall Street Journal reported that Tesla was exploring options to separate its China operations to facilitate a potential merger with SpaceX. Citing people familiar with the matter, the report said advisers had discussed possibilities including a spinoff, sale or shutdown of the China business.
Musk Rejects Report
Responding on social media platform X, Musk described the report as inaccurate.
“This is fake news.”
He later reinforced his denial, writing:
“This has never even come up in a discussion ever. Absurdly fake news. People should assume news is fake until proven otherwise.”
Tesla China Vice President Grace Tao also appeared to address the report indirectly in a post on Weibo. Referring to the World Economic Forum’s Global Risks Report, she noted that misinformation has consistently ranked among the world’s leading risks, placing second among short-term risks and fourth among long-term risks in the 2026 edition.
Merger Speculation Continues
Speculation about closer ties between Tesla and SpaceX has grown following SpaceX’s initial public offering last month.
The two companies have increasingly overlapping businesses. Tesla supplies batteries and Cybertrucks to SpaceX, while Grok, the artificial intelligence chatbot developed by xAI, has been integrated into some Tesla vehicles. SpaceX also acquired Musk’s artificial intelligence company, xAI, earlier this year.
In June, SpaceX President and Chief Operating Officer Gwynne Shotwell told CNBC that combining the businesses could “make Elon’s life a little easier.”
During Tesla’s earnings call last week, Musk acknowledged growing overlap between Tesla and SpaceX but said any merger would require the appropriate corporate process. He added that it was not a subject he could discuss during Tesla’s earnings call.
China Remains Central to Tesla’s Operations
China continues to play a key role in Tesla’s global manufacturing strategy.
Gigafactory Shanghai is the automaker’s largest and most heavily utilized production facility, with annual capacity of approximately one million vehicles. The factory also serves as Tesla’s primary export hub for Europe and the Asia-Pacific region.
Tesla remains the first foreign automaker in China to operate a wholly owned vehicle manufacturing business without a local joint venture partner, unlike competitors including Volkswagen and General Motors.
The company has also built an extensive domestic supply chain, stating that more than 95% of the components used in China-produced Model 3 and updated Model Y vehicles are sourced locally through a network of more than 400 suppliers.