Exclusive | Tesla Weighs Sale of China Business to Pave Way for Potential SpaceX Merger - wsj.com

Tesla is exploring a sale or spinoff of its China operations to address geopolitical concerns and potentially clear the path for a merger with SpaceX, according to The Wall Street Journal. China represents Tesla's second-largest market, making any divestiture a significant strategic shift for the automaker.

The move comes as U.S.-China tensions continue to complicate cross-border business operations, particularly in sectors deemed strategically sensitive. A potential SpaceX merger has long been speculated in trading circles, though Elon Musk controls both companies through different ownership structures. Selling the China business would eliminate one regulatory hurdle that could complicate combining a defense contractor like SpaceX with assets in a geopolitical rival nation.

Tesla shares have been volatile amid broader uncertainty around U.S. technology company exposure to China. The automaker has invested heavily in its Shanghai gigafactory, which serves both the domestic Chinese market and export operations. Any sale or spinoff would require navigating both U.S. and Chinese regulatory approval processes.