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(Bloomberg) — Tesla Inc. is weighing a potential separation of its China business to pave the way for a potential merger with SpaceX, the Wall Street Journal reported.
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Some Tesla executives have been told to prepare for the move, the Journal said, citing a person familiar with the talks. Tesla advisers have discussed options including a spinoff, sale or closure of the China business, according to another person familiar with the situation, the outlet said.
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Tesla China representatives didn’t immediately respond to Bloomberg News queries on the report.
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Speculation has mounted that Elon Musk would move to merge the two companies since Space Exploration Technologies Corp., as SpaceX is formally known, listed last month given their shared ambitions in artificial intelligence.
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During an earnings call last week, Musk, who has spoken about the “convergence” of his companies in the past, acknowledged their increasing overlap, but said a merger wasn’t something he could address on Tesla’s conference call.
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SpaceX already acquired Musk’s artificial intelligence company, xAI, now SpaceXAI, in February. And SpaceX and Tesla already do business together: Tesla sells megapack batteries and Cybertrucks to SpaceX, while the AI chatbot Grok is available in some Tesla vehicles.
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Separating Tesla’s China operations, which include a plant in Shanghai, would address potential conflicts arising from SpaceX’s work as a major US defense contractor, the Journal said. Such a deal would aim to create a firewall between Tesla’s Chinese subsidiary and its US business.
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China is a key market and production base for Tesla, with its Shanghai factory churning out more than half of the company’s global deliveries, and serving export markets such as Europe, Canada and Australia. Musk was among a group of US executives, including Apple Inc.’s Tim Cook and Boeing Co.’s Kelly Ortberg, who accompanied President Donald Trump on his trip to Beijing earlier this year.
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Tesla holds a unique position among China’s most-favored foreign companies.
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It was the first international carmaker to operate without having to form a joint venture with a local manufacturer — an exception not granted to the likes of Volkswagen AG or General Motors Co. That has helped Tesla gain a strong foothold in the world’s biggest auto market, while legacy rivals such as VW and BMW AG struggle.
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English (US)