Put two of the world’s most valuable companies together, and the numbers get dizzying fast. SpaceX now carries a market value above $2 trillion, while Tesla sits near $1.5 trillion.
Musk himself has called combining them “a good idea,” and a deal would dwarf anything Wall Street has seen.
The idea itself is not new. Wedbush analyst Dan Ives has put the odds of SpaceX eventually merging with Tesla at 80% to 90% by early 2027, viewing the SpaceX IPO as groundwork for a deal built on shared supply chains and the joint Terafab chip project.
What changed this week is that the two companies have finally started doing the homework.
Musk says SpaceX, Tesla form committee amid potential merger
Musk was careful about his own role, even while saying he thinks a combination would be a good idea, with gains from cooperating on AI software, chip design, robotics, and launching mass to orbit.
He said both companies set up special committees of independent directors at shareholders’ request, and because he is conflicted, he cannot take part in the talks, calling the setup “an odd kabuki dance.”
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Musk also tried to cool expectations. The committees have not agreed on terms, he said, and “there’s no guarantee that they will,” adding that treating a merger as a sure thing would be “overstating it.”
The vote is another hurdle. Musk pointed out that Tesla would need approval from 50% of all its shareholders, not just those who cast ballots, and he called that a high bar. Shares that never get voted effectively count as a no.
Investors still liked what they heard. Tesla shares rose a little less than 2% shortly after the call, the Wall Street Journal reported. The bump came just a day before Tesla’s own quarterly results, giving shareholders plenty to ask about on that call.
Gizmodo also noted, citing a Wall Street Journal report, that a merger could lift Tesla’s valuation enough to help Musk qualify for his $1 trillion pay package.
SpaceX brought a blowout quarter to the table
The merger news landed on top of a strong report.
SpaceX posted its first profitable quarter since its June IPO, earning $4.4 billion after a $1.1 billion loss a year earlier, while revenue of about $14.6 billion easily topped the $12.7 billion analysts expected, and it finished the quarter with more than $51 billion in cash and $38.6 billion in marketable securities, according to SpaceX’s SEC filing.
Look under the hood, and AI did most of the heavy lifting. SpaceX’s Super Intelligence unit brought in $7.6 billion, up from $813 million a year earlier. The connectivity side, home to Starlink, also grew, just not nearly as fast, landing at $5.2 billion. No wonder Musk keeps pitching the merger as an AI play.
That growth carries some risk, though. Anthropic and Google are the anchor customers for SpaceX’s computing business, but both contracts include 90-day termination clauses. A merger partner with its own heavy AI needs could make that capacity less dependent on outside buyers.
Tesla heads into its own report with some momentum. The carmaker delivered 486,532 vehicles in the third quarter, well ahead of the roughly 461,100 analysts had forecast, as reported by Quartz.
Its results on Oct. 21 will be the first chance for shareholders to press management on the merger.
The AI logic behind a combination
The two companies are already tangled together. Both are betting heavily on AI; they are partnering on Terafab, Musk’s chip factory project in Texas, and SpaceX has already folded in a potential breakthrough in chip fabrication but does not want to discuss the specifics.
Terafab alone shows the scale of the shared ambition. A May SpaceX filing put the first phase at $55 billion; Intel has signed on as an outside foundry customer.
SpaceX President Gwynne Shotwell said in September that the companies were integrating “faster than I thought” but were “not fully integrated yet,” TheStreet reported.
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The two companies already do plenty of business with each other. Over 2024 and 2025, SpaceX and its xAI subsidiary bought roughly $697 million in Megapack battery systems from Tesla, plus another $131 million in Cybertrucks last year, according to Reuters.
Tesla, for its part, put $2 billion into xAI in January. Fold everything into one company, and those side deals simply disappear.
Robotics is the other big piece. Tesla raised its 2026 capital spending guidance to $25 billion, with a large share going to turn old Model S and Model X capacity into Optimus robot lines.
Analysts do not expect Optimus to go on sale before late 2027. Musk sees those robots and SpaceX’s computing muscle as natural partners.
Plenty of questions remain before any deal gets done
Not everyone buys the merger story. Investor Ross Gerber has argued that a combination would look more like SpaceX “bailing out Tesla by buying them over, calling it a merger,” according to Benzinga. Analysts have flagged the stock swap terms, which company ends up as the parent, and possible dilution for retail holders.
Then there is the question of who ends up in charge. Jefferies figures Musk could hold on to roughly 55% of the voting power if the deal carried no premium, as reported by TheStreet. JPMorgan described the pairing as strategically coherent. BNP Paribas, which has an underperform rating on Tesla, was less convinced, warning that SpaceX’s cash burn could hold things up.
Some observers think the outcome is all but settled anyway. Gene Munster of Deepwater Asset Management put the chance of a deal within two years at 90% and said: “shareholders would support this,” Benzinga noted.
For now, Musk has offered no timetable, leaving the next move to the committees and, eventually, shareholders.
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