Elon Musk, who serves as the chief executive for both Tesla and SpaceX, confirmed on Tuesday that his companies are actively weighing a potential mega-merger. During a call discussing SpaceX’s quarterly financial results, Musk stated that he believes a union of the two firms holds significant merit, particularly regarding their shared work in artificial intelligence, software, and computer chip development.
To navigate the complexity of such a move, special committees have been established within each company to evaluate the proposal. Musk noted that he is not participating in these committees, labeling himself a conflicted party due to his leadership roles at both organizations. He described the process of even publicly discussing a possible deal as akin to “tap dancing through a minefield,” emphasizing that there is no guarantee these committees will reach an agreement on the terms of a transaction.
The financial scale of a potential deal would be historic. Tesla currently holds a valuation of roughly $1.5 trillion, while SpaceX is valued at $2 trillion. Shares of SpaceX responded positively to the news, rising 8% during after-hours trading, while Tesla stock saw a 2% gain. SpaceX, with its growing focus on AI infrastructure, quickly outstripped Tesla on the stock market in terms of value when it made its stock market debut.
Despite the potential benefits Musk envisions, the path to a merger faces significant obstacles.
Musk stressed that shareholder approval is the ultimate deciding factor, specifically noting that at least 50% of Tesla shareholders would need to vote in favor of the deal—a requirement he characterized as “quite a high hurdle to achieve. He added a merger would ultimately be decided by shareholders.
However, shareholders have previously aligned with Musk’s vision, such as when they approved a compensation package for him valued at approximately $1 trillion last year.
The companies have already begun exploring closer collaboration, most recently through a joint effort dubbed Terafab to manufacture computer chips. Over the past year, Musk has increasingly moved to consolidate his ventures, including SpaceX’s acquisitions of xAI and the platform formerly known as Twitter before going public earlier this year. A combined effort to manufacture computer chips between Tesla and SpaceX, was another signal that Musk sees his companies as potentially more effective when working together, the recent launch of Terafab.
SpaceX’s business landscape is shifting, with cloud compute capacity for firms like Anthropic and Google becoming its most profitable sector, generating $7.5 billion in the latest quarter, while Starlink contributed $5.2 billion in revenue. Despite this growth, SpaceX remains unprofitable, reporting a loss of $1.1 billion so far this year. Meanwhile, Tesla is currently pivoting resources toward robotics, even as it maintains its position as a leading electric vehicle manufacturer. The company, which builds space rockets and Starlink internet satellites, is now expanding into offering cloud compute capacity for other tech companies, like Anthropic and Google. Bringing in $7.5bn according to the latest quarterly results, that line of business has become the most profitable part of SpaceX. Starlink also tallied revenue of $5.2bn. According to shares of Tesla, which, Its own quarterly results on Wednesday, rose 2% after being down slightly for weeks.
Musk, who became the world’s first paper trillionaire following the SpaceX public debut, maintains that the strategic alignment of their technological resources makes a merger logical. Whether the independent committees will formalize a deal remains to be seen, as the boards and investors weigh the integration of these two corporate giants.
