Musk Eyes Tesla Merger with SpaceX

By Brittany Hayes 02/08/2026 2 min read 13 views

Elon Musk is reportedly exploring a plan to merge SpaceX with Tesla by carving out Tesla’s China business, a move that could redraw the lines between his car, rocket and artificial intelligence empires while alarming officials in Beijing worried about data on roughly two million Chinese Tesla owners.

The plan, if implemented, would separate Tesla’s China operations from its US business ahead of any potential tie-up with SpaceX, according to people cited by the outlet.

Advisers to Musk and Tesla have been weighing options to separate the company’s China operations, including spinning off, selling or even shutting down Tesla’s China arm, and some senior Tesla executives have allegedly been told to prepare for a breakaway.

Tesla did not respond to the request for comment, while Musk publicly dismissed the story as ‘fake news’ on his social media platform X.

Nothing is confirmed yet.

Musk has been drifting towards an all-in-one tech conglomerate for several years, and folding Tesla into SpaceX’s structure would turn his electric vehicle maker into another arm of a broader space-and-AI outfit.

According to sources, Musk has long told Tesla executives to organize the business with a clear line between its US and China operations, to ensure that if relations between Washington and Beijing deteriorated, at least the American side of Tesla could continue to operate.

This precaution now looks like groundwork for a corporate divorce, with advisers discussing creating a separate sales entity to handle exports from Tesla’s Shanghai plant and building more rigid internal firewalls.

At the core of China’s anxiety is not just Musk’s growing corporate sprawl but the nature of SpaceX itself, as a vital US national security contractor, launching classified satellites and running internet services in active war zones, including Ukraine.

Chinese officials fear that Tesla’s industrial know-how and supply chain could in theory be repurposed for the US military, and that data on around two million Chinese Tesla owners could fall under the umbrella of a US defence-linked company.

Beijing would likely demand binding commitments if any deal went ahead.

For now, what appears less in doubt is that Tesla’s China unit is under serious review.

Whether that ends in a spin-off, a sale to Chinese partners, or a quieter internal restructuring designed to mollify both Washington and Beijing, will determine how far Musk can go in his ambition to weld his companies into a single, more formidable machine.

China is Tesla’s second-largest market.

Any split would need to satisfy investors in the US, regulators and political leaders in Beijing, and potentially even the US government, which accounted for 20.9% of SpaceX’s business in 2025.