Tesla has explored selling its China operations as part of broader discussions about a potential merger with SpaceX, according to The Wall Street Journal. The move would streamline Tesla's portfolio ahead of any combination with Elon Musk's space exploration company.
China represents a substantial revenue driver for Tesla. The automaker generated roughly 25% of its global revenue from the country in recent quarters, making any divestiture a major financial restructuring. Tesla operates manufacturing facilities in Shanghai and maintains a significant customer base across mainland China.
The reported discussions remain preliminary. No formal merger proposal between Tesla and SpaceX has emerged, and both companies operate under Musk's control through different ownership structures. Tesla trades publicly as TSLA on the Nasdaq, while SpaceX remains privately held. Such a combination would face extraordinary regulatory hurdles given Tesla's market capitalization near $900 billion and SpaceX's estimated valuation exceeding $180 billion.
Divesting the China business carries its own complexities. Tesla's Shanghai Gigafactory produces vehicles for both domestic consumption and export to other Asian markets. A sale would require navigating Chinese regulatory approval processes and finding a qualified buyer capable of managing an established operation with thousands of employees.
The timing coincides with Tesla's broader strategic review. The automaker has faced pressure from rising competition in EV markets, particularly in China where BYD and other domestic manufacturers gain ground. Simplifying Tesla's geographic footprint could theoretically improve operational focus and valuation metrics ahead of any corporate restructuring.
SpaceX, meanwhile, continues expanding its Starship program and satellite internet operations through Starlink. A merger with Tesla would create an unprecedented conglomerate spanning automotive, aerospace, and communications industries.
Investors should note that preliminary discussions do not guarantee outcomes. Tesla's board and SpaceX's governance structures would need to approve any transaction. Chinese authorities retain final say