Tesla and SpaceX form committees to weigh a $3.5 trillion merger Musk backs

Tesla and SpaceX, the two companies that made Elon Musk the richest person in the world, have each set up a committee of independent directors to study merging into one. Musk, who runs both, told analysts on SpaceX’s earnings call that he backs the idea. Asked whether a combination would be a good idea, he answered: “Yes.”

The deal would put a carmaker owned by millions of ordinary investors, directly or through the index funds in their pensions, inside a company whose biggest business is now renting computing power to AI labs. It would be the largest merger ever, and Tesla’s shareholders, not Musk, would decide whether it happens.

Musk backs the deal but says he cannot sit in the room

“The special committees have not reached agreement on terms of any transaction and there’s no guarantee that they will,” he said, adding that people who assume a merger is a certainty are “overstating it”. Both committees were formed at the request of shareholders, Musk said, and he called himself “a conflicted party” who cannot take part in their talks. Even discussing it, he said, felt like “tap dancing through a minefield”.

His case rests on overlap. Tesla builds cars, Optimus humanoid robots and self-driving software. SpaceX builds rockets and Starlink satellites, and since absorbing xAI and the social platform X before its stock market debut, it also runs large AI data centres. They already share Terafab, a joint chip-making effort, and Musk said a merger would make sense for their work on chips, AI and software.

SpaceX’s AI business now outearns Starlink

Revenue rose 161% from a year earlier to $14.6 billion, ahead of the $12.72 billion analysts expected according to LSEG, and net income reached $4.4 billion after a $1.05 billion loss in the same quarter a year before. The segment SpaceX calls Super Intelligence, which sells data-centre capacity to companies such as Anthropic and Google, brought in $7.56 billion, up from $813 million. Starlink made $5.2 billion, the BBC reported.

Tesla’s owners would hold a smaller slice of something harder to price

With Tesla valued at roughly $1.5 trillion and SpaceX at about $2 trillion, a combination would be worth some $3.5 trillion. It would need the approval of at least half of Tesla’s shareholders, a bar Musk himself called “quite a high hurdle”. They have backed him before, approving a pay package valued at around $1 trillion. Dan Sheehan of Telos Wealth Advisors told the BBC that Tesla investors would likely end up with “a smaller slice of a much larger and more complex business”, and that “there’s no real precedent for how a public company like Tesla gets priced in this”. A combined company would also give Musk more voting control than he holds at Tesla today. And SpaceX is still in the red for the year: it lost $1.1 billion across the first nine months even as revenue roughly doubled to $27 billion.

For drivers, little would change soon. Analysts told the BBC they expect no drastic shift for Tesla owners in the near term, although David Nicholson of The Futurum Group said cars already look like “an afterthought” next to the companies’ shared technology. That matters for a carmaker that lost its crown as the world’s biggest electric-vehicle maker to BYD in January and has narrowed its focus to the Model Y and Model 3. Nothing announced so far touches prices or models for Tesla buyers in Europe or Asia.

Investors liked what they heard. SpaceX shares were up 8.5% in premarket trading on Wednesday and Tesla rose 1.4%, CNBC reported. Tesla reports its own third-quarter results after the closing bell on Wednesday, with Musk leading the call. Musk gave no timetable for the committees.

Sheehan summed up Musk’s side of the deal in one line: “The deal itself doesn’t add to Musk’s wealth, but it concentrates it further in one stock.” For everyone else who owns Tesla, the vote would decide whether their car company becomes one division of that stock.

Tags: Elon Musk, AI infrastructure, SpaceX, tesla, Starlink, mergers and acquisitions