A file photo shows a Tesla Model Y on display at an event in Shanghai. Credit: CnEVPost
- Musk said on X the idea “has never even come up in a discussion,” calling it absurdly fake news.
- Tesla’s China vice president Grace Tao cited a World Economic Forum report, alluding to the risk of misinformation.
Tesla (NASDAQ: TSLA) CEO Elon Musk moved quickly to deny a report that the company is considering separating its China business, calling the claim entirely false.
The Wall Street Journal reported on Thursday that Tesla is weighing a separation of its China operations to clear the way for a potential merger with SpaceX (NASDAQ: SPCX). Advisers have discussed options including a spinoff, a sale or a shutdown, the report said, citing people familiar with the matter.
Musk initially responded on X, the platform he owns, saying, “This is fake news.”
He later added: “This has never even come up in a discussion ever. Absurdly fake news. People should assume news is fake until proven otherwise.”
This has never even come up in a discussion ever.
Absurdly fake news.
People should assume news is fake until proven otherwise.
— Elon Musk (@elonmusk) July 31, 2026
Grace Tao, Tesla’s vice president in China, also responded indirectly on Weibo. Citing the World Economic Forum’s (WEF) Global Risks Report, she said the spread of misinformation has ranked among the world’s top risks for several years running, coming in second among short-term risks and fourth among long-term risks in the 2026 edition.
Speculation about a merger of the two companies has been building since SpaceX completed its IPO last month. The two share overlapping ambitions in AI and have increasingly intertwined businesses.
Tesla supplies batteries and Cybertrucks to SpaceX, while Grok, the AI chatbot owned by SpaceX, is already installed in some Tesla models. SpaceX also acquired Musk’s AI company xAI in February.
Gwynne Shotwell, SpaceX’s president and chief operating officer, told CNBC in June that combining the businesses could “make Elon’s life a little easier.”
Musk acknowledged on last week’s earnings call that overlap between the two companies is growing, but said a merger would have to be done with the appropriate process, adding that it was not something he could discuss on a Tesla call.
As of Thursday’s close, SpaceX was valued at $1.48 trillion and Tesla at $1.22 trillion.
For Tesla, China remains its most important manufacturing base. The Shanghai Gigafactory has annual capacity of about 1 million vehicles, making it the company’s largest and most heavily utilized plant, as well as an export hub for Europe and the Asia-Pacific region.
Tesla is the first automaker in China wholly owned by a foreign company without a joint venture partner, a position unique among global carmakers. Volkswagen and General Motors still operate under joint venture structures.
The depth of its localization is also hard to replicate. Tesla has said parts localization exceeds 95% for the China-made Model 3 and the updated Model Y, supported by more than 400 local suppliers.
Tesla China’s wholesale sales reached 467,949 vehicles in the first half, up 28.39% year-on-year, according to China Passenger Car Association (CPCA) data. That accounted for 55.83% of the company’s 838,149 global deliveries.
Tesla China Monthly Sales (Exports Included) 2024-2026
Month
2024
2025
2026
January
71,447
63,238
69,129
February
60,365
30,688
58,599
March
89,064
78,828
85,670
April
62,167
58,459
79,478
May
72,573
61,662
85,982
June
71,007
71,599
89,091
July
74,117
67,886
August
86,697
83,192
September
88,321
90,812
October
68,280
61,497
November
78,856
86,700
December
93,766
97,171
Tesla China monthly sales (exports included)
2024
2025
2026
Exports from the Shanghai plant totaled 228,994 units in the first half, a jump of 126.58% from a year earlier.
China’s role for Tesla is changing, however. In the second quarter, deliveries in China fell 2.05% year-on-year to 126,157 units, or 26.28% of global deliveries — the first time the share has dropped below 30% since the fourth quarter of 2020.
Tesla China Quarterly Retail Sales 2024-2026
Quarter
2024
2025
2026
Q1
132,420
134,607
112,798
Q2
145,897
128,803
126,157
Q3
181,883
169,294
Q4
196,902
192,994
Tesla quarterly sales in China
2024
2025
2026
Exports from the Shanghai plant reached 128,394 units in the same period, surpassing local deliveries for the first time in a single quarter and underscoring the site’s growing role as an export hub.
In China, Tesla faces intense competition from local players including BYD (HKEX: 1211). In June, Leapmotor (HKEX: 9863) topped Tesla China in wholesale sales.
Some Tesla executives have been told to prepare for a separation of the China business, according to the Wall Street Journal.
