Tesla CEO Elon Musk has publicly rejected a media report suggesting the EV giant is preparing to divest its Chinese operations to facilitate a potential merger with SpaceX. The tech tycoon called the report “fake news.”
The Wall Street Journal reported Thursday evening that Tesla executives had been instructed to develop plans for either selling or spinning off the company’s China operations. According to the report, this move would aim to reduce regulatory roadblocks associated with combining Tesla with SpaceX, a megamerger that has been rumored since SpaceX went public.
Tesla’s extensive Chinese operations include a significant electric vehicle manufacturing plant and a battery-packaging Megapack factory. These facilities present multiple potential obstacles that could complicate any merger plans. SpaceX operates as a major national security contractor for the United States government, which would subject Tesla’s Chinese business relationships to intense scrutiny from American regulators.
Any potential combination of the two companies would also likely face substantial review from Chinese authorities, adding another layer of complexity to such a transaction. The Journal‘s report indicated that Musk has structured Tesla’s Chinese operations with the possibility of easy separation in mind, serving as a hedge against escalating geopolitical tensions between the United States and China.
Responding to the report overnight on the social media platform X, Musk stated: “This has never even come up in a discussion ever. Absurdly fake news. People should assume news is fake until proven otherwise.”
Despite his denial of the specific report, Musk has publicly discussed the concept of merging SpaceX and Tesla on multiple occasions, though he has often been evasive about concrete plans. During Tesla’s recent earnings conference call, Musk acknowledged the limitations on such discussions, saying, “Obviously we can’t talk about, you know, combining companies and that kind of thing on earnings calls.”
The two companies have been establishing increasingly close operational ties. They are collaborating on a joint venture to construct what would become the world’s largest semiconductor factory. Both organizations regularly purchase products from one another. The financial connections between the companies extend beyond operational collaboration, with Tesla holding a two billion dollar stake in SpaceX that has appreciated to a current value of three billion dollars.
Musk has demonstrated a willingness to consolidate his business empire in the past. SpaceX acquired xAI in February, which had previously absorbed Musk’s social media platform X.
Beyond national security considerations, any potential merger would face significant challenges related to company valuations. SpaceX stock closed Thursday with a market capitalization of 1.49 trillion dollars, only marginally above Tesla’s 1.18 trillion dollar market value.
Read more at the Wall Street Journal here.
Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.