Musk calls report of Tesla China sell-off ‘fake news’

Elon Musk moved swiftly to deny a Wall Street Journal News Corp ↘ 3.58% report that Tesla ↗ 0.32% is considering a separation of its China business to clear the path for a potential merger with SpaceX, calling the story "absurdly fake news" on his social media platform X.

The WSJ Report

The Wall Street Journal reported on Thursday that some Tesla executives had been told to prepare for a separation of the company's China operations ahead of a potential SpaceX tie-up. Tesla advisers discussed possible options including a spinoff, sale, or closure of the China business, according to the report, which cited people familiar with the talks. It remained unclear how quickly Tesla could execute such a move, and the plans could change, the Journal noted.wsj+1

The report said Musk in recent years had instructed Tesla executives to organize the company with a "laser" between its U.S. and China businesses, wanting to ensure that in the event of geopolitical strife between the two countries, at least the U.S. half of Tesla would survive.wsj

Musk's Denial

Musk responded on X, writing: "This has never even come up in a discussion ever. Absurdly fake news. People should assume news is fake until proven otherwise". Reuters reported that it was unable to independently verify the Journal's claims, and that Tesla and SpaceX did not immediately respond to its requests for comment.reuters+2

What's at Stake in China

Tesla's Shanghai Gigafactory is the company's largest and most productive plant globally, with annual production capacity exceeding 950,000 vehicles. The factory accounted for more than half of Tesla's global vehicle deliveries in 2025 and serves as the main export hub for Europe, Canada, and the Asia-Pacific region. Tesla sources more than 95% of components for its China-made vehicles locally through a network of over 400 domestic suppliers.reuters

Earlier in July, Musk left the door open to a Tesla-SpaceX merger, declining to dismiss the possibility and citing growing overlap between the companies. A combination of the two firms would raise substantial geopolitical and regulatory hurdles, particularly given SpaceX's sensitive national security role as a U.S. government launch provider.investing