Elon Musk’s latest praise for China comes as speculation around a possible Tesla-SpaceX combination puts the automaker’s Shanghai operations under fresh scrutiny. While Musk has dismissed reports of plans to separate Tesla’s China business, the country could still pose regulatory and geopolitical challenges to any future merger.
Elon Musk has described China as “awesome” and encouraged people to visit the country, even as Tesla’s presence there becomes a key talking point in speculation over a potential merger with SpaceX.
Musk made the comment on X while responding to a podcast discussing whether Tesla’s Shanghai operations could complicate a proposed combination of the electric carmaker and the space company. The remark comes at a notable time for Musk, whose businesses have increasingly intersected with China’s technology and automotive industries.
The discussion follows a Wall Street Journal report claiming Tesla executives had been asked to examine what could happen to the company’s China operations if Musk proceeds with plans to combine Tesla and SpaceX. Musk strongly rejected that report, saying the issue had never been discussed.
“This has never even come up in a discussion ever. Absurdly fake news,” Musk wrote on X.
The WSJ report said advisers had considered possibilities including separating, selling or shutting down Tesla’s China business, although any such plans were described as preliminary.
Why China could complicate a Tesla-SpaceX deal
The Shanghai factory makes China an unusually important part of Tesla’s global operations, but its position could create difficulties if the company were ever brought closer to SpaceX.
SpaceX has substantial US government and national security contracts, making its business subject to restrictions and scrutiny that do not apply to Tesla in the same way. A structure linking the two companies could therefore raise questions about how Tesla’s Chinese manufacturing and commercial interests would coexist with SpaceX’s sensitive US operations.
More from TechThe podcast discussion also examined Tesla’s ambitions in robotaxis. Musk has been pushing autonomous driving as a major part of Tesla’s future, while SpaceX’s Starlink satellite network provides another potential technological link between Musk’s businesses.
Tesla recently showcased what it described as the first Cybercab with Starlink integration. Musk said the system would eventually allow passengers to watch live sports in 4K, movies, games or use productivity services while travelling.
That integration could be particularly relevant to China, where Tesla faces a crowded domestic market. The country has several established electric vehicle and autonomous-driving companies, while regulatory approval remains a significant factor for firms looking to deploy robotaxis at scale.
Musk’s China stance draws attention
For Tesla, China remains too important to simply ignore. The country is both a major manufacturing base and one of the world’s largest electric vehicle markets. At the same time, expanding autonomous services there would put Tesla up against local companies with established relationships and a strong understanding of the regulatory environment.
That creates a difficult balance for any future Tesla-SpaceX structure. US authorities could have concerns about closer links between a company with extensive Chinese operations and SpaceX, while China could have its own reservations about deeper involvement with a US aerospace business.
Yet the commercial appeal of Tesla products in China could remain significant. The podcast discussion suggested that a Tesla robotaxi service could attract substantial interest among Chinese consumers, even if regulatory and geopolitical obstacles make deployment difficult.
Musk’s more positive comments about China therefore come against a complicated backdrop. They do not confirm any change in Tesla’s China strategy, nor do they establish that a Tesla-SpaceX merger is imminent.
For now, Musk continues to dismiss reports of preparations to separate Tesla’s China business. But if the two companies do eventually move closer together, Tesla’s Shanghai operations are likely to remain one of the most difficult issues to resolve.
