Tesla is reportedly considering separating its entire China business as it explores a merger with SpaceX, according to the Wall Street Journal. Such a move could help address the national-security and citizenship restrictions faced by SpaceX as a US defence contractor, but would represent a significant restructuring for Tesla.

Executives have reportedly been asked to prepare options including a spin-off, sale or closure of the China operation. Tesla had already prepared for a potential split if China invaded Taiwan, and China is now central to Tesla’s operations as a major sales market and manufacturing base serving Asia and Europe.