Tesla executives have been told to prepare for a separation of its China business ahead of a potential merger with SpaceX, the Wall Street Journal reported on Thursday, citing a person familiar with the talks.
Tesla advisers have discussed possible options for a separation, including a spin-off, sale or closure, the report said, adding that it was unclear how quickly Tesla could spin out or sell the China business and that the plans could change.
Tesla and SpaceX could not be immediately reached for comment outside regular business hours.
Tesla’s Gigafactory Shanghai remains its largest and most productive plant globally, serving as its key export hub for Europe and the Asia-Pacific region.
The facility historically accounts for more than half of Tesla’s global deliveries, with an annual production capacity of more than 950,000 vehicles.
While Giga Shanghai acts as a vital export pipeline, China itself is Tesla’s second-largest market globally after the United States, though it faces intense pressure from local players such as BYD.
Earlier this month, Tesla CEO Elon Musk left the door open to the EV maker merging with his other trillion-dollar-plus-valued firm SpaceX, declining to dismiss the possibility and citing growing overlap between the companies.
SpaceX President and Chief Operating Officer Gwynne Shotwell has also acknowledged potential benefits, telling CNBC in June that folding the companies together “might make Elon’s life a little easier” by streamlining management across his businesses.
However, JPMorgan analysts have pointed to the “practical bottleneck” of getting regulatory approvals for both companies, particularly in China, where national security concerns over SpaceX’s U.S. government ties could pose problems.
SpaceX went public last month after a record $75 billion initial public offering and was valued at $1.48 trillion as of Thursday’s close. Tesla has a market capitalisation of $1.22 trillion.
Reuters
