Elon Musk Reportedly Wants A Tesla-SpaceX Merger, And Selling Tesla China Could Be The First Step Toward Making That Happen – Jalopnik

SpaceX already owns xAI, which Elon Musk beforehand merged with Twitter, however why cease there? Why not squish all of Elon’s firms collectively and have SpaceX swallow up Tesla, too? The rumor’s been floating round for some time, but it surely appears Tesla’s operations in China may get in the way in which of Elon’s dream of his no-longer-a-car-company and his rocket/CSAM firm becoming a member of collectively in unholy matrimony. According to the Wall Street Journal, although, Musk has an answer — simply eliminate the China enterprise.

It does not sound like Musk and his sure males have settled on a selected plan for Tesla China, but when the WSJ’s sources are right, it will not be lengthy earlier than we study extra. Allegedly, “Tesla advisers have discussed possible options for a separation, including a spinoff, sale or closure”, and “some Tesla executives have been told to prepare for a separation of the China business ahead of a potential merger.”

Musk has additionally reportedly been getting ready for one more divorce (business-wise, after all) for some time now, the WSJ experiences:

Musk lately instructed Tesla executives to prepare the corporate with a “laser” between its U.S. and China companies, based on individuals acquainted with the planning. He needed to make sure that within the occasion of geopolitical strife between the 2 nations, a minimum of the U.S. half of Tesla would survive.

Tesla did not reply to the WSJ’s request for a remark, however Musk was variety sufficient to take a brief break from retweeting essentially the most vile racists on the web to disclaim the report and name it “fake news.” As anybody who put a deposit down on a brand new Tesla Roadster can inform you, you possibly can’t belief something Elon says, however a minimum of for now, that is his official stance.

While particulars on Tesla’s plans to separate its operations in China from these within the U.S. are nonetheless unavailable, and Elon claims the report is “fake news,” the concept to merge Tesla and SpaceX is nothing new. He’s even urged previously that may be his final objective. From the WSJ:

Musk, who’s chief government of each Tesla and SpaceX, has talked up the crossover potential between each firms in latest months as he reorganizes them round artificial-intelligence initiatives. Investors and analysts have embraced the concept of a merger following a record-setting IPO for SpaceX, which raised $86 billion for the corporate in June.

“Obviously we can’t talk about, you know, combining companies and that kind of thing on earnings calls,” Musk instructed traders final week. “It is got to be done with the appropriate process.”

The nativist Trump administration that Elon spent a lot cash electing has been extremely hostile towards China and even firms with minimal connections to the Asian superpower, however splitting Tesla China off from the remainder of Tesla could be about greater than making Trump pleased. It would additionally make it simpler for SpaceX to soak up Tesla with out jeopardizing the federal government contracts wanted to maintain SpaceX afloat whereas conserving China pleased, as properly. From the WSJ:

Separating Tesla’s China operations—together with an electric-vehicle manufacturing unit there—would handle potential conflicts arising from SpaceX’s work as a serious U.S. protection contractor. Such a deal would purpose to create a firewall between Tesla’s Chinese subsidiary and its U.S. enterprise.

SpaceX faces important restrictions because of its dealings with the U.S. authorities. The firm is a serious national-security protection contractor, with enterprise strains that embody launching top-secret satellites and working web companies in battle zones like Ukraine.

Sales to the U.S. authorities made up 20.9% of its enterprise in 2025. That enterprise is very regulated, with the corporate restricted by export controls and, for some applications, categorized authorities actions.

Elon may, after all, change his thoughts at any time, however based mostly on the WSJ’s reporting, it appears like the larger query is what to do with Tesla China, not whether or not Tesla ought to cut up it off or not. What that may appear to be, although, stays to be seen. According to the WSJ:

Executives have additionally mentioned making a separate gross sales entity to deal with exports from Tesla’s Shanghai plant, one of many individuals stated.

Tesla may create separate workplace techniques and bar China-based workers’ direct entry to different firm items, the individual stated. While Tesla China already has some autonomy, workers roughly work collectively across the globe and the highest government in China, Tom Zhu, oversees all of Tesla’s world automotive enterprise.

China is at the moment Tesla’s second-largest market and the electrical automaker has two main factories positioned in Shanghai. But past determining how precisely it desires to construction the proposed cut up, Tesla additionally has persuade the Chinese authorities to get on board forward of its merger with SpaceX:

A possible merger between SpaceX and Tesla would seemingly set off intense scrutiny from Beijing, given {that a} main U.S. protection contractor would management Tesla’s factories in China and the factories’ know-how and provide chain could possibly be repurposed for the U.S. army, based on individuals acquainted with the matter. Another concern for Beijing is {that a} deal may put information of China’s roughly two million Tesla house owners within the fingers of an American protection firm, they stated.

In the occasion of a merger, Beijing would seemingly search Tesla’s dedication and enterprise guardrails to forestall the affect of SpaceX on Tesla China and illicit diffusion of dual-use items corresponding to rare-earth supplies from Tesla China to SpaceX, the individuals stated.

No one appears to know once we’ll study extra, however on the very least, if Elon actually does attempt to merge Tesla and SpaceX, it ought to be entertaining. With SpaceX’s share value collapsing, why not merge it with a automotive firm that is formally now not a automotive firm?