On the way to a huge merger? Tesla is considering an unprecedented step that will shake up the market

According to sources familiar with the details who were interviewed by the “Wall Street Journal”, Musk has already in recent years directed Tesla executives to create a clear and precise buffer between the businesses in the United States and those in China. The main goal was to ensure that in the event of a sharp geopolitical escalation between the two superpowers, at least the American half of the company would survive unscathed. Now, the plans seem to be becoming practical: a number of Tesla executives have recently been instructed to actively prepare for the separation of the Chinese operation, with the company’s advisers discussing various options that include a split, a sale, or if necessary, a shutdown.

Such a move is expected to have a huge impact on Tesla, as the company’s Chinese branch, which includes the giant factory in Shanghai, has made it a global leader and extremely profitable. China is currently the company’s second largest market, and was responsible for approximately 18% of all sales in the first half of 2026. However, the idea of ​​a merger with SpaceX is particularly appealing to investors, all the more so after the space company’s historic public offering last June, in which it raised an imaginary sum of $86 billion.

The main complication preventing the merger at this stage stems from the nature of SpaceX. This is a major national security contractor for the American government, with its sales to the government accounting for close to 21% of its revenue in 2025. This activity is highly classified and sensitive, and includes, among other things, the launching of secret satellites and the provision of Internet services in conflict zones such as Ukraine. A possible merger is expected to provoke strong opposition and strict checks in Beijing, which fears a situation in which an American defense contractor controls factories inside China, owns advanced supply chains, and worse – gets access to sensitive information of almost two million Chinese Tesla vehicle owners. In the event of a merger, China will require strict firewalls to prevent the leakage of knowledge and rare materials from Tesla China to the American military industry.

But it turns out that Musk’s fears of a crisis in the East are not new, and the preparation began a long time ago. Back during Donald Trump’s first term, Tesla launched a secret initiative called “Project Carbon” to move Chinese suppliers to Mexico. The move stemmed not only from fear of protective tariffs, but from Musk’s deep concern about China’s dependence on the supply of battery cells and chips from Taiwan. The main concern is that a possible Chinese invasion of the island will disrupt the production chain completely. The goal set for senior officials, the sources stated, was to reach peak readiness for the years 2026 or 2027, in anticipation of the outbreak of war. In this tense reality, breaking away from the Chinese market – as American companies such as Starbucks and Yum Brands have done in the past – may not only be a strategic necessity for a huge merger, but the most important insurance policy for the entire Musk empire.