Musk denies selling Tesla assets in China. The merger with SpaceX remains in the background

One day after the publication of the accounts of SpaceX, which will arrive tomorrow after the markets are closed, the possible merger with is still on the table Tesla and the hypothesis that the latter separates from its activities in China. All this despite Elon Musk dismissed as “fake news”, with some posts on X, the indiscretion according to which Tesla executives had been invited to prepare for this eventuality. According to reports from Wall Street JournalInstead, Tesla advisors reportedly discussed several options for the China business, including a spin-off, sale or closure. The newspaper said it was unclear how quickly Tesla might proceed and that plans could still change.

“It never even came up in a discussion,” Musk wrote on his X account, commenting on the article. “Absurdly false news,” he then added. A merger between Tesla and SpaceX, moreover, could occur geopolitical and regulatory obstacles, particularly in China. SpaceX is in fact one of the main US defense contractors and is involved in programs related to national security and satellites, while Tesla owns and directly manages production plants in the country. Investors and analysts have long discussed the possibility of merging Musk’s two companies, and speculation has intensified during SpaceX’s IPO process. Musk, on the other hand, did not rule out a possible merger between the two entities, underlining how the activities of both are increasingly overlapping.

Musk and the weight of activities in China

In recent years, the American newspaper recalls, Musk would also have asked Tesla executives to organize the group by creating a clear separation between activities in the United States and those in China, with the aim of ensuring that, in the event of strong geopolitical tensions between Washington and Beijing, at least the US part of the company could survive. Unlike many other foreign automakers, Tesla’s operations in China are not organized through a joint venture with a local partner.

The Shanghai GigafactoryFurthermore, it is the largest and most productive Tesla factory in the world, with a annual capacity exceeding 950 thousand vehicles, a central hub for exports to Europe, Canada and Asia-Pacific. China, for Tesla, is the the group’s second global market after the United States.

10 million vehicles produced globally.
Congrats to all Tesla teams!

— Tesla Manufacturing (@gigafactories) July 30, 2026

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The obstacles to a possible merger with SpaceXThe analysts of JPMorgan have pointed to regulatory approvals as a major practical obstacle to a merger, especially in China, where SpaceX’s dealings with the US government could raise national security questions. According to the Wall Street Journal, among the hypotheses discussed there would also be the in charge of managing exports from the Shanghai plant. Tesla could also create separate IT and administrative systems and prevent China-based employees from directly accessing other divisions of the group.

Even the president and chief operating officer of SpaceX, Gwynne Shotwell, recognized the possible benefits of integration. He said in an interview with CNBC in June that bringing the companies together “could make Elon’s life a little easier” by streamlining the management of his companies.

Tesla’s supplier network in China

Thanks to activities in China and a network of over 400 local suppliers, Tesla has managed to achieve the lowest production costs for Model 3 and Model Y in the country, a Tesla China executive told Reuters. More than 60 of these suppliers also supply Tesla factories around the world.

Deliveries of Model 3 and Model Y made in China in June have increased by 24.4% compared to the same month of the previous year, while in the second quarter sales and exports from the Shanghai plant they grew up 32.8%. Tesla also stated that over 95% of the components used for the Model 3 produced in China and for the updated Model Y is purchased from local suppliers.