Tesla CEO Elon Musk has publicly dismissed media reports claiming the electric vehicle maker is preparing to separate, sell, or spin off its China operations ahead of a potential merger with SpaceX, calling the claims "absurdly fake news". Responding directly on his social media platform X, Musk stated that such a restructuring "has never even come up in a discussion ever," refuting assertions that executives were instructed to weigh strategic options for its Chinese business units.What the Initial Report ClaimedThe controversy erupted following a report published by The Wall Street Journal, which cited sources familiar with internal discussions. The report suggested that Tesla advisers were evaluating structural options for its China business—including a potential spin-off, sale, or closure—to navigate regulatory and geopolitical hurdles ahead of a rumored combination between Tesla and SpaceX.According to the report, the potential friction stemmed from:Defense & Security Conflicts: SpaceX's status as a major U.S. defense contractor handling national security payloads and satellite networks.China Asset Exposure: Tesla’s ownership of major manufacturing assets in China, which could attract intense regulatory scrutiny from both Washington and Beijing in a cross-industry merger.Operational Isolation: Alleged internal discussions about establishing separate office IT networks and restricting direct data access between China-based employees and Western divisions.Musk and Tesla China Issue Firm RebuttalsFollowing the media coverage, both Elon Musk and Tesla's regional executives moved quickly to label the story fabricated."This has never even come up in a discussion ever. Absurdly fake news. People should assume news is fake until proven otherwise."— Elon Musk, CEO of Tesla & SpaceX via XRepresentatives for Tesla China separately released statements calling the story "false information," while Grace Tao, Tesla's Vice President in China, shared remarks pointing out the global risks of misinformation in modern media landscapes.Gigafactory Shanghai’s Central Role in Tesla’s OperationsA separation of Tesla’s Chinese assets would represent a radical shift in the company's global operating model. Unlike standard foreign automakers in China, Tesla operates its Shanghai plant as a wholly owned subsidiary rather than a joint venture.Metric / AssetSignificance to Tesla GlobalGigafactory Shanghai OutputAccounts for more than 50% of total global vehicle deliveries.Local Supply ChainSources >95% of components locally for China-built Model 3 and Model Y units.Export Hub StatusPrimary manufacturing base supplying markets across Europe, Canada, and Asia-Pacific.Market FootprintChina remains Tesla's second-largest market globally, behind the United States.Broader Context: SpaceX Merger SpeculationSpeculation around an overarching deal combining Musk’s corporate empire—including Tesla, SpaceX, and xAI—has intensified. During recent earnings calls, Musk declined to rule out structural integration between Tesla and SpaceX entirely, acknowledging growing operational overlaps in artificial intelligence, battery supply chains, and materials engineering.However, analysts at major financial firms, including JPMorgan, maintain that navigating cross-border regulatory approvals—particularly involving China—remains a dominant bottleneck for any combined corporate structure. Following Musk's immediate denial of the China split report, Tesla shares held firm, rising approximately 2% in trading as markets digested the clarification.Also Read :- SpaceX Wins .6 Billion US Space Force Deal: Will Elon Musk Power America's Golden Dome?
