NEW YORK, July 31 — Tesla boss Elon Musk has dismissed a report that the electric carmaker is considering separating its China business to pave the way for a merger with his space company SpaceX, reported German news agency dpa.

“This is fake news,” Musk wrote on his social media platform X in response to a post about the report by the Wall Street Journal. The post Musk replied to late Thursday was later deleted.

Tesla’s Shanghai factory accounts for more than half of the company’s global vehicle production. Its only other manufacturing plant outside the United States is located outside of Berlin.

The Wall Street Journal, citing a person familiar with the matter, reported that some Tesla executives had been instructed to prepare for a separation of the company’s China operations ahead of a potential merger. A second source told the newspaper that advisers had discussed options including a spin-off, sale or closure of the China business.

Speculation about a possible merger between Tesla and SpaceX, which is also led by Musk, has circulated for some time. During Tesla’s quarterly earnings call last week, Musk did little to dispel the rumours. Asked by an analyst about a possible combination, he acknowledged there were overlaps between the companies but said a quarterly earnings call was not the appropriate forum to discuss a merger.

“It is got to be done with the appropriate process,” Musk said, before handing over to Tesla’s chief legal officer, Brandon Ehrhart, who highlighted joint projects including the construction of a semiconductor plant known as Terafab.

A merger between Tesla and SpaceX would not be possible while Tesla retains its China business, according to the Wall Street Journal. 

SpaceX is a key contractor for the US spaceflight initiatives and carries out numerous government launches, including military missions. It also plays a central role in the United States’ current lunar exploration programme. — Bernama-dpa