Musk Reveals Talks of Potential Merger Between Tesla and SpaceX

Elon Musk revealed during SpaceX’s third quarter earnings call that special committees have been established to explore a potential merger between Tesla and SpaceX. As the CEO of both companies, Musk mentioned that these committees were formed at the request of shareholders and are made up of independent directors, although he did not disclose their identities. He clarified that he is not part of either committee and is not involved in the discussions.

“Because I’m a conflicted party, I can’t actually be in the discussions of the special committees,” Musk explained. “So it’s an odd kabuki dance where two groups of people are talking and I can’t be in the conversation.”

Currently, the committees have not reached any agreement regarding the terms of a transaction, and there’s no certainty that they will. “At the end of the day, the shareholders have to be supportive of this,” he added. “And particularly on the Tesla side, we will need a 50 percent vote of all shares, not just those who vote, but of all shareholders. And that’s quite a high hurdle to try to achieve.”

Musk expressed that the idea of a Tesla-SpaceX merger is promising. He stated, “I do think there’s a lot of merit to combining companies as we are pretty much in the superintelligence singularity. And there’s a lot to be gained from cooperating on developing superintelligence software, chip design, the TeraFab, obviously robotics, mass to orbit with the Starmind constellation, connectivity. So I think it would be a good idea, but it’s really up to the special committees of both companies. They’ve got to come up with something and then that’s going to be put to the shareholders as a vote.”

A merger between Tesla and SpaceX would create a colossal corporate entity valued at over $3.6 trillion. However, merging Musk’s automotive and energy company with his aerospace and AI firm would come with challenges. The dynamics of which company absorbs the other are crucial. If Tesla were to acquire SpaceX, it would need to issue millions of new stock shares, potentially diluting current Tesla shareholders’ stakes. Additionally, SpaceX’s ambitious launch objectives require substantial funding, which could impact Tesla’s capacity to invest in new factories and battery production.

Most analysts and legal experts on Wall Street believe that SpaceX would likely acquire Tesla or integrate it through a stock swap, rather than the other way around. Since its IPO, SpaceX has consistently held a higher valuation than Tesla, and such a merger would enable SpaceX shareholders to maintain majority control of the new entity. This prospect might not sit well with some Tesla shareholders.

On the flip side, a merger would consolidate investments for those who align with Musk’s vision of the future, which includes robot cars, humanoid robots, AI super-intelligence, and human settlements on Mars. Notably, Tesla shareholders approved Musk’s substantial pay package last year, even after a Delaware judge dismissed it due to concerns over independence.

Earlier this month, a financial institution suggested that an announcement regarding a potential Tesla-SpaceX merger could come before Tesla’s annual shareholder meeting set for December 3, 2026.