Elon Musk has dismissed a Wall Street Journal report that Tesla considered selling or spinning off its Shanghai Gigafactory, calling the claims 'absurdly fake news.' The denial came after the Journal said advisers had weighed a sale, spin-off, or even closure of Tesla's China operations, possibly tied to a merger with SpaceX. The Shanghai plant is Tesla's largest, with an annual capacity exceeding 950,000 vehicles and accounting for more than half of the company's global deliveries. It also exports to Europe, Canada, and the Asia-Pacific region.
Why the rumor gained traction
The report landed during a rough stretch for Tesla. The stock suffered its worst week since 2022 after mixed second-quarter results. Revenue came in at $28.24 billion, but margins narrowed to 16.8%. Investors have been watching for signs of strain in China, where competition from local EV makers like BYD has intensified. Wolfe Research has framed a potential Tesla-SpaceX merger as a core investor thesis, a possibility Musk has never firmly ruled out. SpaceX's record IPO in June 2026 raised $75 billion, valuing the company at $1.75 trillion. Musk himself has argued that SpaceX could outvalue Earth itself.
Ark Invest's big bet
Cathie Wood's Ark Invest disclosed a $529 million rotation from Tesla into SpaceX shares in July 2026, citing similar merger logic. The move added fuel to speculation that Musk might combine the two companies, though he has not confirmed any such plan. Musk has a track record of terse denials that move markets; he issued a similar denial of another SpaceX rumor just weeks earlier.
What's at stake in Shanghai
Gigafactory Shanghai is not just Tesla's biggest plant—it's a linchpin of the company's global supply chain. The factory exports vehicles to Europe, Canada, and the Asia-Pacific region, making it critical for Tesla's international sales. Any disruption or change in ownership could ripple through Tesla's production and delivery targets. For now, Musk's denial suggests the company intends to keep the plant, but the persistent rumors indicate that investors and analysts remain skeptical about Tesla's long-term strategy in China.
The next concrete test will come when Tesla reports its third-quarter delivery numbers later this year. If those figures disappoint, the chatter about a sale or merger is likely to resurface—denials or not.
