Elon Musk said Tuesday that SpaceX and Tesla have each formed special committees to explore a possible merger of the two companies he leads, and that he thinks the idea is "a good idea."1,4,5,7
Asked on a SpaceX earnings call whether a merger would be a good idea, Musk said: "Do I think it would be a good idea? Yes. But at the end of the day, the shareholders have to be supportive of this." He said there was no guarantee the committees would reach a deal and that they had not yet agreed on terms.5,7,1
Musk said he would not take part in the talks himself. "Because I'm a conflicted party, I can't actually be in the discussions," he said, according to Axios. Ars Technica reported that the committees were formed at the request of shareholders of each company and are made up of independent directors.4,5
At recent valuations, SpaceX is worth about $2 trillion and Tesla about $1.5 trillion. The BBC described a combination as the largest merger ever. Al Jazeera said it would be the biggest corporate tie-up in history, far exceeding the $1.25 trillion union between SpaceX and xAI in February, and put the combined market value at about $3.5 trillion, although its opening summary had said more than $3 trillion.1,4,7
Musk said the companies could gain from working together. "There's lots to be gained from cooperating on developing superintelligence software, chip design, the Terafab, obviously robotics, mass to orbit with the Starmind constellation, and connectivity," he said. The BBC said a combination would bring together Tesla's cars, robots and self-driving technology with SpaceX's rockets, data centres, satellites and telecommunications operations.5,1
Any deal would require approval from shareholders, and Musk called the threshold a high hurdle. Half of Tesla's shareholders would need to back it. Ars Technica noted that the 50 percent figure applies to all Tesla shareholders, not only those holding voting shares. Musk also cautioned against assuming a deal was certain. "Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it," he said.1,4,5,7
Analysts expressed differing views on the likelihood of a deal. David Nicholson of The Futurum Group told the BBC: "In my opinion, 100%. It's just a question of when." Gene Munster of Deepwater Asset Management said there was a 95 percent chance a deal would happen within two years, and wrote on X: "Believe me, shareholders would support this." Dan Sheehan of Telos Wealth Advisors said, "There's no real precedent for how a public company like Tesla gets priced in this."1,4
Jerayr Haleblian, who studies mergers and acquisitions at the University of California, Riverside, told Al Jazeera the deal has "sound logic." "In some sense, the core of both businesses are expert manufacturing," he said.7
Ars Technica reported that, according to SpaceX's IPO documents, Musk holds more than 82 percent of the voting power at SpaceX and about 20 percent at Tesla. Ars said a merger could give him a majority of the voting shares in the combined company, depending on valuations and negotiated terms. The BBC quoted Sheehan saying that the deal itself "doesn't add to Musk's wealth, but it concentrates it further in one stock." Musk is the world's richest person, and Al Jazeera put his net worth at more than $900 billion.5,1,7
Tesla drivers are unlikely to see much change in the near term, experts told the BBC. Tesla has said it will prioritise its best-selling Model Y and Model 3 and has begun producing its Optimus humanoid robots at a California plant. The carmaker faces intense competition from Chinese manufacturers, and BYD overtook Tesla as the world's biggest electric vehicle maker in January.1
Markets reacted to the news and to SpaceX's results. SpaceX shares rose 8 percent in after-hours trading, the BBC said, and Tesla shares climbed 2 percent, according to the BBC, while Al Jazeera put the Tesla gain at 1.8 percent. Al Jazeera reported that SpaceX posted its first quarterly profit, with net profit of $4.4 billion in the July-September quarter, compared with a $1.05 billion loss a year earlier. The New York Post's headline cited a 161 percent surge in revenue.1,7,6
Ars Technica said the merger would face scrutiny from US regulators and that some political leaders who are wary of Musk's influence may object. The BBC reported that the deal could face more regulatory pressure if Democrats win more seats in the midterm elections next month, and quoted Nicholson saying Musk is already a polarising figure in the US.5,1
Tesla reports its quarterly results on Wednesday, Axios reported. The committees have yet to reach any agreement. Musk described the next steps on the earnings call. "They've got to come up with something, and then that's got to be put to the shareholders as a vote," he said.4,7