Elon Musk Says Tesla-SpaceX Merger Is Under Active Consideration
Musk says special committees at both companies are studying a deal that would rank among the largest mergers in history
By AXY Business Desk ·
Key points
- Elon Musk said on Tuesday that a merger of Tesla and SpaceX is under active consideration and that he thinks it would be a good idea.
- Special committees have been formed at both companies to examine the move, but they have not agreed on terms and there is no guarantee they will.
- Tesla is valued at roughly $1.5 trillion and SpaceX at $2 trillion, which would make a combination one of the largest mergers in history.
- SpaceX's cloud compute business brought in $7.5 billion and is its most profitable part, but SpaceX as a whole has lost $1.1 billion so far this year.
- Tesla shares rose 2% after the comments, and Tesla reports its quarterly results on Wednesday.
Elon Musk said on Tuesday that a merger of Tesla and SpaceX is under active consideration, and he said he thinks the idea would be a good one. Speaking on a call with financial analysts about SpaceX's quarterly business results, Musk was asked whether a combination made sense and answered directly.
"Do I think it would be a good idea? Yes," Musk said.
He was careful not to present the deal as settled. Musk said a merger should not be assumed and would need the support of shareholders. Still, he said special committees had been formed inside both companies to examine the move. Those committees are groups set up to review a proposed transaction on behalf of a company's shareholders, and their job is to decide whether a deal makes sense before any terms are agreed.
"The special committees have not reached agreement on terms of any transaction and there's no guarantee that they will," Musk added. "But I do think there is a lot of merit to merging and a lot to be gained."
What Musk said on the analyst call
The comments were the most direct statement so far that Musk is weighing a full combination of the two companies. He told analysts that a full merger would make sense for the work each company is doing around chips, artificial intelligence, software and other areas.
The remarks came during a discussion of SpaceX's financial results, which is one reason they drew attention. Musk did not give a timeline for any decision. He did not say what terms the committees were discussing, how shareholders of either company would be paid, or what share of a combined company each side would hold. Those details are the core of any merger, and none were offered on the call.
The lack of detail is typical at this stage. A company that says it is considering a deal usually has not yet agreed a price, a structure or a timetable, and it may never reach those points. Musk's own words made the uncertainty plain. He said the certainty of a merger should not be assumed.
How the idea developed
The merger idea is part of a longer pattern. Musk has run Tesla as its chief executive for years, and he also leads SpaceX, the rocket and satellite company he founded. Over the past year, he has moved to bring more of his businesses under fewer corporate banners.
Before SpaceX went public earlier this year, it acquired xAI and X, the platform formerly known as Twitter. Both were companies Musk already owned. In that sense, the deals were internal consolidations, with one of his companies taking over another rather than a rival being bought from outside.
Another step came with the recent launch of Terafab, a combined effort between Tesla and SpaceX to manufacture computer chips. The project shows the two companies already sharing technical work. Taken together, these moves suggest Musk sees his companies as potentially more effective when they operate as a closer group. A merger would be the most complete version of that approach.
Why a Tesla and SpaceX deal would be so large
Tesla is the electric carmaker whose shares trade on public markets. SpaceX builds space rockets and Starlink, the company's internet satellite network, which beams broadband service to customers in areas that are hard to reach with cables or towers. According to the figures reported on the call, Tesla is valued at roughly $1.5 trillion and SpaceX at $2 trillion. Combined, the two companies would be worth roughly $3.5 trillion, which would put a merger among the largest the business world has seen.
That scale is why the idea has drawn so much attention. Large mergers are usually justified by cost savings, access to bigger markets, or products and technology that work better together. Musk's argument rests on the last point. He has pointed to overlapping work in chips, artificial intelligence and software, areas where both companies already spend heavily on research and development.
Whether that overlap is large enough to justify combining two separate listed companies is a question investors, lawmakers and regulators would have to weigh. Analysts would also ask whether a combined group could be managed well, given how many large businesses already depend on Musk's attention.
What SpaceX's results show
SpaceX's business is shifting. The company is expanding into cloud computing capacity, which means renting out computing power to other technology firms that need it to run their software and artificial intelligence systems. Musk named Anthropic and Google as examples of companies in that field.
According to the latest quarterly results, the cloud compute business brought in $7.5 billion and is now the most profitable part of SpaceX. Starlink reported revenue of $5.2 billion over the same period. Those two lines show that SpaceX's newer business is no longer only about launching rockets, although rockets and satellites remain central to the company.
The overall picture is less comfortable. SpaceX as a whole is not profitable, and it has lost $1.1 billion so far this year. That gap matters for any merger. If a loss-making company were combined with one valued at a much higher level, the terms would shape how much each group of shareholders gains or gives up. Those terms have not been published.
What a merger would need to clear
Any deal of this size would face several hurdles. The first is governance. Special committees are meant to give independent directors a way to review a transaction in which a powerful executive or a controlling shareholder may have an interest. Investors would want to know who sits on each committee, how independent they are from Musk, and what advice they receive.
The second hurdle is shareholder approval, which Musk said would be needed. Shareholders of both companies would have to vote in favour, and some may object if they believe the price is too low or the structure favours one group over another.
The third is regulatory review. Large combinations are usually examined by competition authorities in the countries where the businesses operate. Both Tesla and SpaceX have activities that reach across markets, so a deal would likely draw scrutiny beyond the United States. Those reviews can take months and can change the terms of a deal.
For ordinary people, a deal like this is less about the headline value than about what it does to the companies they own, work for or depend on. A Tesla owner, a Starlink customer, or an employee at either firm could eventually see changes in products, management or priorities. Musk has not announced any such changes, and nothing in his remarks suggested that customers would see a difference soon.
Investor reaction and what to watch next
Investors responded with some optimism. Shares of Tesla rose 2% after being down slightly for several weeks. The move suggests the market took the comments as a sign of possible action, but it does not show that a deal is likely. Stock prices can rise on news that is later never followed up.
Tesla reports its own quarterly results on Wednesday, and those figures will give investors a clearer view of the company's current position before any merger talks advance. Analysts are likely to ask Tesla's management whether the committee process has begun and how the company views the idea.
Several points will shape what happens next. The first is whether the special committees publicly confirm their work, and how they are set up. The second is whether either company names advisers or announces a proposed set of terms. The third is how the two companies describe their shareholder support and any regulatory steps.
For now, the position is clear on one point. Musk has said the idea is under consideration, that he thinks it has merit, and that the committees have not agreed on terms. Whether a merger happens, and in what form, remains an open question.
Questions and answers
Is Tesla really going to merge with SpaceX?
Not yet. Elon Musk said a merger is under active consideration and that he thinks it would be a good idea, but he also said there is no guarantee it will happen and the special committees have not agreed on terms.
Why would Tesla and SpaceX merge?
Musk said a full merger would make sense for the work each company does around chips, artificial intelligence and software. He also pointed to Terafab, a joint chip manufacturing effort, as a sign the two companies already work closely.
How big would a Tesla and SpaceX merger be?
Tesla is valued at roughly $1.5 trillion and SpaceX at $2 trillion, so a combined company would be one of the largest mergers in history. Any deal would still need shareholder support.
What happens next with the Tesla and SpaceX merger idea?
Special committees at both companies are examining the move, and any deal would need shareholder approval. Tesla reports its own quarterly results on Wednesday, which will give investors more information.
Topics: Elon Musk, Tesla, SpaceX, Tesla SpaceX merger, Starlink, xAI, Terafab
Sources: BBC Business RSS
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