Musk Denies Tesla Is Preparing to Exit China as Separation Reports Persist

Elon Musk has rejected reports that Tesla is preparing to spin off or sell its China operations, calling the reports “absurdly fake news.”

Tesla CEO Elon Musk has rejected reports that the company is preparing to separate or sell its China operations. [Photo: Tesla Asia X]

Musk responded on X after reports emerged that Tesla executives had been asked to prepare contingency plans for separating the company's China business.

The reported options included spinning off the unit, selling it or shutting it down, AJ Tiarsmith reported for 24/7 Wall St.

The Wall Street Journal previously reported that Tesla advisers had considered possible ways to separate the China business as the company explored a potential merger with SpaceX.

The issue is complicated by SpaceX's U.S. defense contracts and Tesla's substantial manufacturing and commercial presence in China.

Reuters also reported that Tesla executives had been asked to prepare for a possible separation, while Musk denied that such discussions had occurred. 

Tesla's Shanghai factory remains an important part of the company's global manufacturing network.

Separating the Chinese operation could therefore create significant regulatory, operational and supply-chain challenges.

As of Aug. 18, Tesla shares were trading well above their July 29 level, although the stock remained substantially below its level at the start of the year.