According to The Wall Street Journal, Tesla is allegedly contemplating divesting its complete business in China to facilitate a merger with SpaceX.

The publication states that “certain Tesla executives have been instructed to get ready for a potential separation from the China branch,” which may entail a “spinoff, sale, or shutdown,” referencing unnamed sources. The firm is said to be poised to implement this fairly swiftly since CEO Elon Musk has already directed executives to prepare for a division should Beijing take action against Taiwan.

Dividing China from Tesla’s worldwide operations could streamline the integration of the company into SpaceX, a defense contractor that must adhere to stringent regulations regarding citizenship and national security. This would also represent a significant concession. China has increasingly become a cornerstone for Tesla’s operations, serving not just as a market for its vehicles but also as a production center catering to Asia at large and also Europe.