SpaceX and Tesla Explore a Merger Worth More Than $3 Trillion
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Elon Musk apparently wants to combine what he already runs side by side: SpaceX and Tesla are exploring a merger that, at a value of more than $3 trillion (about €2.7 trillion), would be the largest deal in corporate history. Both companies have set up special committees of independent directors for this purpose, Mr. Musk confirmed on Tuesday during the conference call on SpaceX’s quarterly results.
Mr. Musk Is Not at the Table
“Do I think it would be a good idea? Yes,” Mr. Musk said. In the end, however, shareholders would have to approve it. Because he runs both companies, he is conflicted and cannot take part in the talks, he said. He described the process as a kind of “kabuki dance” in which two groups talk to each other while he stays on the sidelines. The committees have not agreed on any terms so far, and there is no guarantee that they will, he added.
Mr. Musk named approval at Tesla as the biggest hurdle: A deal would need the support of a majority of all outstanding Tesla shares. Dan Levy, an analyst at Barclays, considers it likely that SpaceX would act as the buyer and take over Tesla in an all-stock deal. According to Reuters, Barclays believes an announcement could come as early as December.
Bigger Than Amazon
SpaceX is worth more than $2 trillion on the stock market, Tesla just under $1.5 trillion. Together, Mr. Musk’s two companies would be worth more than Amazon. The market reacted positively: Tesla shares rose about 1.5 percent in after-hours trading, while SpaceX gained as much as 8 percent after its strong quarterly results and the merger news.
Mr. Musk justified the idea with the progress of A.I. There is a lot of merit to combining the companies, he said, because “we are pretty much in the superintelligence singularity.” Gains could come in A.I. software, chip design, robotics, launches into space and connectivity through the Starlink network.
Already Closely Intertwined
In fact, the two companies have long been closely linked. Together they are building Terafab, a huge chip plant in Texas for autonomous cars, humanoid robots and A.I. data centers in space, for which the chip giant TSMC recently set its own conditions. Just last week, Tesla showed off a Roadster that jumps and does flips using cold-gas thrusters from SpaceX, and Mr. Musk’s A.I. chatbot Grok runs free of charge in many Teslas.
There are financial ties, too. Tesla’s investment in xAI was converted into about 19 million SpaceX shares when SpaceX took over xAI, less than 1 percent of the company. In 2025, according to its latest documents for the annual meeting, Tesla generated $430 million in revenue from xAI and $143 million from SpaceX.
Supporters and Critics
On Wall Street, many consider the deal a done deal. Gene Munster of Deepwater Asset Management puts the probability that it happens within two years at 95 percent. Dan Ives of Yorkville Ives & Co calls it a “no-brainer,” according to a Reuters survey, but estimates that Tesla shares would need to be around $550 for it to happen. They most recently closed at just under $374.
Critical voices see mainly a governance problem. Josh Gilbert of eToro points out that a single person runs both sides of the deal. Even Michael Monaghan of Founder ETFs, who sees no fundamental governance issue, says Tesla’s China business may need to be walled off because of SpaceX’s defense contracts. The tech site Electrek has also analyzed those documents: Three of Tesla’s nine directors have ties to SpaceX. In a takeover, parts of Mr. Musk’s pay package would also vest immediately. In a $3 trillion deal, that would amount to about 106 million additional Tesla shares, according to Electrek.
What happens next will become clear soon. Tesla reports its own quarterly results today, and its annual meeting in Texas follows in early December.
