Musk says Tesla and SpaceX merger has 'a lot of merit'

Elon Musk has said combining Tesla and SpaceX would be a "good idea", and that special committees have been formed to assess a potential deal. Nothing has been agreed, and Musk stressed there is no guarantee a merger will happen, the BBC reports ^[1].

What Musk said

On a call with SpaceX investors on Tuesday, Musk said there is "a lot of merit" to the idea, and that the boards of both companies had set up special committees but had not reached agreement on terms, according to The Guardian ^[2]. On Tesla's earnings call the next day, he declined to add more, saying he had "said everything that should be said", and described feeling like he was "tap dancing through a minefield" ^[2]. The BBC adds that Musk called describing the merger as a certainty "overstating" things ^[1].

The BBC puts Tesla's value at roughly $1.5 trillion and SpaceX's at $2 trillion, so a combination would be the largest merger ever ^[1]. Any deal would need the backing of 50% of all Tesla shareholders, which Musk himself called "quite a high hurdle" ^[1][2]. Musk is chief executive of both firms and cannot take part in shareholder discussions ^[1]. After the Tuesday comments, SpaceX shares rose 8% in after-hours trading and Tesla shares climbed 2% ^[1].

Why combine them

Musk said the companies' work on chips, AI and other technology would make a merger beneficial. The deal would bring together Tesla's cars, robots and self-driving technology with SpaceX's rockets, data centres, satellites and telecoms operations ^[1]. The BBC notes SpaceX has acquired xAI and X over the past year before going public this year ^[1].

Analysts quoted by the BBC were divided on detail but broadly saw logic. David Nicholson of The Futurum Group said the deal is, in his opinion, 100% likely and "just a question of when" ^[1]. Dan Sheehan of Telos Wealth Advisors said Tesla shareholders would likely hold a "smaller slice of a much larger and more complex business" ^[1]. The BBC also points to the risk of regulatory scrutiny, particularly if Democrats gain seats in next month's US midterms ^[1].

The Tesla backdrop

Tesla reported third-quarter revenue of $28.05bn and earnings of $0.48 per share, ahead of the $27.9bn and $0.43 Wall Street expected, though revenue was slightly below the previous quarter and automotive revenue fell 3% year on year ^[2]. Its share price is down more than 11% this year, despite a rebound on the merger news ^[2]. The Guardian also notes that the Optimus robot has faced production hurdles, and that the Robotaxi service has struggled to scale ^[2].

What it means

Experts told the BBC that Tesla drivers are unlikely to see much change soon, with cars described as almost an "afterthought" next to the combined technology ^[1]. The open question, in Sheehan's words, is how much priority cars get inside a company increasingly driven by AI infrastructure ^[1].

For business leaders, the story is a reminder of how far AI is reshaping corporate strategy: a carmaker and a rocket company are being weighed as one AI and infrastructure business. Treat it as a proposal under study, not a done deal.

Source: BBC News — Tesla and SpaceX: Why does Elon Musk want to merge the companies?