WSJ has learned about Tesla's plans to sell its business in China to merge with SpaceX

The American company Tesla is considering the possibility of selling or separating its business in China amid preparations for a potential merger with the SpaceX space corporation. The Wall Street Journal (WSJ) reported this on July 30, citing sources.

According to the interlocutors of the publication, the American billionaire, CEO of SpaceX and Tesla, Elon Musk, instructed the heads of the multinational company to organize the work so that the Chinese division could be easily separated from the American one. The sale, closure, or separation of the business into a separate structure are being discussed as possible options. The head of the companies seeks to minimize risks in the event of an escalation of geopolitical conflicts and guarantee the survival of the American part of Tesla, the publication says.

As the newspaper pointed out, Musk is particularly concerned about dependence on battery supplies from China and possible disruptions to semiconductors. Preparatory measures are planned to be completed by 2026 or 2027. Separating operations would also help SpaceX maintain its status as a major U.S. defense contractor, avoiding conflicts of interest due to its work in China.

"Obviously, we can't talk about mergers and the like at financial results conferences. This should be done in accordance with the proper procedure," Musk said in a statement to investors last week.

According to the newspaper, at the moment SpaceX's revenue from contracts with the US government is 20.9%. The company carries out orders in the field of national security, including the launch of secret satellites and the provision of communications in combat zones.

The scenario of a merger between the two corporations has already received preliminary support from analysts after SpaceX raised $86 billion in an initial public offering (IPO) in June. As part of the asset restructuring, Tesla may ban employees in China from accessing the internal systems of other divisions and create a separate structure to manage exports from the Shanghai factory. At the same time, WSJ experts note that the deal could trigger a backlash from Beijing due to concerns about the transfer of Tesla technologies under the control of a Pentagon contractor.

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On May 14, US President Donald Trump said that American companies would like to expand their presence in China. He added that China is also investing hundreds of billions of dollars in United States companies.