Elon Musk Dismisses Report On Tesla China Business Sale As 'Fake News'

Tesla CEO Elon Musk has dismissed as "fake news" a media report claiming that the electric vehicle maker was considering separating or selling its China business to overcome regulatory challenges linked to a potential merger with SpaceX. Musk rejected the report without providing further details, while reiterating that no such plan was under consideration. The report had sparked speculation due to recent comments by Musk about increasing operational overlap between Tesla and SpaceX.

According to a report by The Wall Street Journal, Tesla executives were evaluating several options for the company's China operations, including a spin-off, sale or even a shutdown. The report stated that no final decision had been made and that multiple structures were being explored. However, Musk has not announced any proposal to merge Tesla with SpaceX, despite market speculation surrounding the relationship between the two companies.

The report suggested that separating Tesla's China business could help address regulatory concerns if a future merger with SpaceX were to be pursued. As SpaceX is a major US defence contractor, its combination with Tesla, which operates wholly owned manufacturing facilities in China, could face increased regulatory scrutiny. It also claimed that advisers were examining measures such as creating a standalone entity for exports from Tesla's Shanghai Gigafactory and establishing separate information technology systems to limit access by China-based employees to global operations.

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Tesla's Shanghai Gigafactory remains one of the company's most significant production facilities, accounting for more than half of its global vehicle deliveries and possessing an annual production capacity exceeding 950,000 vehicles. The plant exports vehicles to markets including Europe, Canada and Australia and surpassed the milestone of producing four million vehicles in China in December. Tesla is also the first foreign automaker permitted to operate in China without a local joint-venture partner, with more than 95 per cent of components for the Model 3 and Model Y sourced from domestic suppliers.

Tesla's shares rose 3.53 per cent to close at $308.85 on the Nasdaq at the end of Thursday's trading session, although the stock has declined more than 26.6 per cent over the past month. SpaceX shares, meanwhile, edged down 0.3 per cent to close at $112.20, extending their monthly decline to more than 34 per cent. Despite the market speculation, Musk's dismissal of the report indicates that there are currently no confirmed plans to restructure Tesla's China operations or pursue a merger with SpaceX.

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