Tesla-SpaceX merger faces China regulatory hurdles

Elon Musk’s proposed Tesla-SpaceX merger faces significant regulatory hurdles in both the US and China due to national security concerns and data-sharing restrictions, potentially complicating the deal announced Tuesday. Tesla’s heavy reliance on China for manufacturing conflicts with SpaceX’s sensitive US defense contracts, including Pentagon satellite systems. Chinese regulators require Tesla driver data to remain in-country, and a firewall separating operations would likely be necessary, though Beijing may seek concessions as leverage. Analysts suggest divestment options exist but face complications, including finding buyers. Tesla’s Shanghai plant produces over half its global output, providing crucial cash flow for future ventures, making a clean break difficult despite investor optimism about scaling back China operations.