Tesla weighs China exit to clear path for SpaceX merger

The Wall Street Journal reports that internal directives have already been issued to ready a separation of the China business, ranging from a complete divestiture to a total closure. Because Musk had previously ordered staff to model a split in anticipation of a potential Taiwan conflict, the groundwork for a rapid withdrawal is already in place.

This structural pivot serves a strategic purpose: SpaceX operates as a sensitive defense contractor bound by stringent national security and citizenship requirements. By shedding its China ties, Tesla could bypass regulatory hurdles that currently block a merger between the two entities. Abandoning the region remains a high-stakes gamble, as China serves as both a critical consumer market and the primary manufacturing backbone for Tesla’s global supply chain, including exports to Europe.