Tesla weighs China split ahead of SpaceX tie-up

Tesla is reportedly weighing separating its China operations—potentially via sale, spin-off, or closure—as it considers a potential merger with SpaceX. Wall Street Journal sources describe the talks; Elon Musk denied the report as 'absurdly fake news' and a Tesla China representative called it false. A merged Tesla-SpaceX would face Beijing scrutiny due to SpaceX's defense contracts and the strategic importance of Tesla’s Shanghai plant, which is its largest factory and a key export hub. China accounted for roughly 18% of Tesla’s H1 2026 sales, and the two companies already have deep ties, including vehicle and battery sales and a SpaceX stake. Investors nudged Tesla stock higher in premarket trading on the chatter.