Musk Denies Report Tesla Would Sell China Unit for SpaceX Merger

AUSTIN, Texas — Tesla CEO Elon Musk moved quickly on Thursday to shut down a Wall Street Journal report that his automaker is weighing a sale, spinoff, or wind-down of its China business to clear a regulatory path for a merger with SpaceX, calling the story "absurdly fake news" on his X account.

The report said Tesla advisers had discussed options for separating the company's Chinese operations, anchored by the Shanghai Gigafactory that builds more than half of every Tesla sold worldwide. Musk's response was blunt: "This has never even come up in a discussion ever." Tesla's China unit separately dismissed the account as false.

Why China Sits at the Center of the Merger Question

The friction is not really about Tesla — it is about SpaceX. As one of the U.S. government's most important defense and launch contractors, SpaceX faces heavy national-security scrutiny, and folding Tesla's large China manufacturing footprint into that entity would raise obvious questions in Washington. Tesla's Shanghai plant is the company's most efficient factory, having built its four millionth China-made vehicle in December, and it supplies export markets across Europe and Asia. Tesla's European registrations have climbed even as its China sales streak extended, underscoring how central the plant is to Tesla's global supply.

That combination — a defense contractor bolted to a major Chinese production base — is exactly the structural obstacle analysts have long flagged for any Tesla-SpaceX tie-up.

Musk Has Kept the Merger Idea Alive

The denial lands against a backdrop Musk himself created. On Tesla's second-quarter earnings call last week, he pointed to "more and more overlap, especially with Terafab," between the two companies before pulling back and deferring the question to Tesla's general counsel. He has declined for months to rule out a combination, citing shared work in AI, chips, and robotics.

Investors have watched that overlap grow as Tesla reframes itself around autonomy and its Optimus program. Tesla's humanoid robot line recently began firing up at Fremont, part of a broader push to position the company as an AI and robotics leader rather than a pure carmaker.

What It Means for Shareholders

For now, this is a report and a denial, not a decision. Giga Shanghai remains a profitable, high-volume asset that Tesla is unlikely to part with casually, and Musk's flat rejection suggests no imminent move. Still, the market reaction was telling: TSLA shares firmed after the denial, a sign investors would rather see Tesla keep its best factory than restructure the business to enable a deal.

The bigger picture is that Musk continues to expand the connective tissue between his companies — Terafab, xAI, shared compute, and now merger speculation — while insisting the appropriate process will govern any combination. As Electrek reported on the underlying story, the plans, if they exist at all, could still change.

Whatever the outcome, the episode is a reminder of how tightly Musk's empire is now intertwined — and how much value investors place on the pieces staying exactly where they are.