Elon Musk denied a Wall Street Journal report that Tesla could separate its China business to clear geopolitical obstacles for a possible merger with SpaceX.
Key Points:
- Musk said discussions about separating Tesla's China operation had never occurred at any level inside the company.
- Tesla China also rejected the report as false.
- Merger speculation persists as prediction markets price a possible deal and both companies face sharp investor scrutiny.
Tesla China Denial
The Wall Street Journal reported on Jul. 30 that Tesla executives had been told to prepare for a possible separation of the China operation, while advisers considered a spinoff, sale or closure. The report said the planning could support a future SpaceX merger, although its timing remained unclear and the options could change.
Musk rejected the account on X.
He wrote, “This is fake news,” then said the matter had “never even come up in a discussion ever,” calling the report “Absurdly fake news.” Tesla China separately told The Paper that the claim was “false information,” reinforcing the parent company's denial.
Tesla's Shanghai Gigafactory is its largest and most productive plant, with annual capacity above 950,000 vehicles and a central role in exports to Europe, Canada and the Asia-Pacific region. China is Tesla's second-largest market after the United States.
Also Read: Microsoft Outruns Wall Street With 43% Azure Growth And $90B Revenue
SpaceX Merger Stakes
Merger speculation has intensified since Musk discussed growing overlap between Tesla and SpaceX during Tesla's Jul. 22 earnings call. He did not announce a transaction.
Prediction market Kalshi placed the chance of a deal before May. 1, 2027, at 49%, reflecting trader expectations rather than evidence that formal negotiations are underway. A combination would face scrutiny because SpaceX is a major U.S. defense contractor while Tesla owns manufacturing operations in China.
Cathie Wood has kept backing both companies as ARK Invest bought millions of dollars in shares during the recent sell-off. “Starship’s successful splashdown was perhaps game-changing news for SpaceX,” Wood said.
Market performance has added pressure to the debate. Tesla rose 3.53% to $308.85 on Jul. 30, while SpaceX slipped 0.31% to a record-low close of $112.20 and remained more than 50% below its Jun. high.
Read Next: OpenAI Says July Revenue Alone Outran Its Entire Second Quarter