Tesla is reportedly considering cleaving off its entire business in China to grease the wheels of a merger with SpaceX, according to the Wall Street Journal.
The newspaper reports that “some Tesla executives have been told to prepare for a separation of the China business,” which could include a “spinoff, sale or closure,” citing unnamed sources. The company reportedly would be able to do this fairly quickly because CEO Elon Musk had already tasked executives to prepare for a split in the event that Beijing invades Taiwan.
Separating China from Tesla’s global operations could make it easier to integrate the company into SpaceX, which is a defense contractor that has to follow strict rules around citizenship and national security. That would also be a major concession. China has grown to dominate Tesla’s business, not only as a market for its vehicles, but as a production hub that serves Asia more broadly, and also Europe.