Tesla labels WSJ report of China business separation “fake news”

Tesla has officially refuted reports claiming the company is considering spinning off, selling, or closing its China operations to facilitate a potential merger with SpaceX.

The controversy erupted following a report by the Wall Street Journal, which cited sources claiming that Tesla executives had been instructed to prepare for a separation of the China business. The reported plans allegedly included the creation of an independent sales entity to manage overseas exports from the Shanghai Gigafactory, as well as implementing strict “firewalls” to limit China-based employees’ access to other company units.

When contacted by National Business Daily, The Paper and multiple Chinese media outlets, a representative from Tesla China dismissed these claims as “false information.” CEO Elon Musk also took to his social media platform, X, to label the reports “fake news.”

The speculation stems from a potential merger between Tesla and SpaceX, a prospect that has intensified during SpaceX’s record 75 billion USD initial public offering (IPO) process. During Tesla’s Q2 2026 earnings call, Musk noted that cooperation between the two companies is increasing across multiple fields, though he emphasised that any merger would require formal procedures and was not appropriate for discussion during an earnings call.

Industry analysts, including those from JPMorgan quoted by WSJ, have highlighted significant “practical bottlenecks” regarding regulatory approvals. Because SpaceX is a major U.S. defence contractor involved in sensitive national security and satellite programs, a merger could trigger severe geopolitical and regulatory hurdles, particularly in China.

The stakes are high for Tesla, as the Shanghai Gigafactory remains the company’s largest and most productive plant globally. According to Tesla’s Q2 2026 financial report, the facility’s annual production capacity for the Model 3 and Model Y exceeds 950,000 vehicles.

Recent data underscores the factory’s importance as a global export hub. In June, deliveries of Model 3 and Model Y vehicles produced in Shanghai rose 24.4% year-over-year. For the second quarter of 2026, the combined total of sales and exports from the Shanghai plant increased by 32.8%.

Unlike many other foreign automakers in the region, Tesla operates its Chinese facilities without a local joint-venture partner. The company has previously stated that it sources more than 95% of components for the China-made Model 3 and refreshed Model Y locally, utilising a network of over 400 domestic suppliers to achieve its lowest manufacturing costs.