TSLA, SPCX Rise After Cathie Wood Says Musk Is ‘Working All Angles’ With Trump, Xi Amid China Merger Hurdles

Cathie Wood predicted a potential Tesla-SpaceX merger, agreeing that a deal could be announced this year.

• Wood said Musk was ‘working all angles’ with Trump and Xi, highlighting his China connections and possible robotaxi plans.
• Tesla’s substantial Chinese operations and SpaceX’s U.S. defense business create geopolitical and export-control hurdles.
• Musk denied reports of a possible Tesla China separation, while ARK analysts called China a manageable ‘small-ish wrinkle.’

Shares of Tesla (TSLA) and SpaceX (SPCX) rose Wednesday as ARK Invest CEO Cathie Wood said Elon Musk was “working all angles” with U.S. President Donald Trump and Chinese President Xi Jinping, while identifying China as a major hurdle to a potential merger.

TSLA stock closed 0.6% higher at $354.81 on Wednesday, while SPCX gained 1.1% to end at $150.86.

Wood Backs TSLA-SPCX Merger As ARK Buys Both Stocks

Wood discussed the potential merger with early SpaceX investor and Xprize Foundation Executive Chairman Peter Diamandis in a recent interview amid the Trump-Xi summit in Washington.

She said Tesla and SpaceX were among ARK’s largest holdings and predicted that the companies would merge, agreeing that a deal could be announced this year. “You know, it’s very interesting to see him sitting at the table with President Trump and Xi Jinping. And we know that Maye Musk is adored in China, so he’s working all angles here,” Wood said.

She also pointed to discussion of Tesla developing a robotaxi system in China. “And there’s even been talk that he’s going to be able to develop a robotaxi system in China. So it’s very interesting,” she said. Wood acknowledged that China could complicate a merger, given SpaceX’s national-security role and the administration’s posture toward Beijing.

“Many people would say that’s the biggest stumbling block, given our defense posture and given how this administration has basically portrayed the Chinese as our biggest potential enemy,” she said. “Keep your enemies close is what I think this week is all about.”

ARK continued buying both stocks on Tuesday, purchasing 48,352 Tesla shares through ARK Innovation ETF (ARKK)  and 9,112 SpaceX shares worth about $1.3 million as part of $149 million in purchases. 

Tesla’s China Business Complicates Merger Path

The China hurdle became more visible around SpaceX’s June listing. Its IPO prospectus disclosed that U.S. government sales accounted for 20.9% of 2025 revenue, including business serving national-security customers through Starshield. SpaceX is also subject to export controls, while its underwriters barred mainland Chinese and Hong Kong orders during the offering, citing compliance concerns.

Tesla’s Shanghai operation, meanwhile, is a major manufacturing and export hub. It has produced more than half of Tesla’s global deliveries in recent periods and supplies vehicles to Europe and Asia. China accounts for about a fifth of Tesla’s sales.

WSJ reported in July that some executives had been told to prepare for a possible separation of Tesla’s China business, potentially through a spinoff, sale or wind-down. The supposed rationale was to prevent a potential SpaceX merger from bringing Tesla’s Shanghai operations into a U.S. defense contractor. The report also called out Beijing’s concerns about Chinese customer data and dual-use goods.

However, Musk rejected the report. “This has never even come up in a discussion ever. Absurdly fake news,” he said. ARK subsequently argued that the challenge could be managed. In its August Brainstorm podcast, analysts Brett Winton, Sam Korus and Nick Grous called China a “small-ish wrinkle” and said both shareholder groups could be “net better off” if the companies combined. They also discussed the possibility of a deal before year-end.

Shared Tech Boosts TSLA-SPCX Merger Case

Analysts have also begun highlighting Tesla and SpaceX’s growing overlap. Morgan Stanley said they “share tech, talent, and infrastructure,” while JPMorgan flagged China as the practical bottleneck and Stifel said timing is the key question for investors expecting a merger.

The companies signed a Terafab semiconductor framework in March, with Intel joining in April and SpaceX disclosing the collaboration in its IPO filing. On Tesla’s last earnings call, Musk acknowledged increasing overlap but said any merger required “the appropriate process.”

How Do Retail Traders Feel About TSLA And SPCX?

On Stocktwits, retail sentiment for TSLA was ‘neutral’ amid ‘normal’ message volume, while SPCX sentiment was ‘bullish’ amid ‘high’ message volume. 

One user said, “$SPCX & $TSLA will never merge.  It makes no sense from a business standpoint, and the buying company's stock will get crushed by the dilution.”

View this Stocktwits post

However, another user said, “There is now an 80% chance $TSLA AND $SPCX merge before 2028. Everyone knows the SpaceX and Tesla merger will happen eventually. The question is, which one do you buy now? $TSLA or $SPCX ?”

View this Stocktwits post

While TSLA stock has declined 21% year-to-date, SPCX fell 6% over the same period. 

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