Elon Musk has said he likes the idea of merging Tesla and SpaceX, two of his most prominent companies, and that the proposal is under active consideration. Speaking on a call with financial analysts on Tuesday, during a discussion of SpaceX’s quarterly business results, he was asked whether it would be a good idea. “Yes,” he said.
Musk cautioned that a merger should not be assumed and that it would need shareholder support. He said special committees within both companies had been formed to examine the move. Shares of SpaceX rose 8% in after-hours trading.
Special committees and the shareholder hurdle
Musk said the special committees had not agreed on the terms of any transaction and that there was no guarantee they would. He nonetheless argued that there was considerable merit in a merger and a lot to be gained.
He said he is not included in either of the committees considering the proposal. Musk described himself as a “conflicted party” because he is chief executive of both companies. He also compared commenting on the possibility of a merger to “tap dancing through a minefield”.
Musk said the decision would ultimately rest with shareholders. At least 50% of Tesla’s shareholders would need to approve the merger, which he described as “quite a high hurdle to achieve”. He noted that shareholders have backed his wishes before, pointing to a compensation package for him valued around $1 trillion that a majority of Tesla investors approved last year.
Valuations and the logic behind a combined company
Tesla is valued at roughly $1.5 trillion and SpaceX at $2 trillion. Combining the two would mark one of the largest mergers in history, according to the figures cited in the reports.
Musk said a full merger would make sense for the work each company is doing in chips, artificial intelligence, software and other areas. He pointed to the recent launch of Terafab, a joint effort between Tesla and SpaceX to manufacture computer chips, as another sign that he sees his companies as potentially more effective when they work together.
Shares of Tesla rose 2% after being slightly down for weeks. The electric carmaker reports its own quarterly results on Wednesday. While Tesla is known for electric cars, Musk has recently been shifting resources toward robotics.
SpaceX’s cloud business and recent consolidation
SpaceX builds space rockets and the Starlink internet satellites, and it is now expanding into offering cloud compute capacity to other technology companies, including Anthropic and Google. That line of business has become the most profitable part of the company, bringing in $7.5bn according to its latest quarterly results. Starlink tallied revenue of $5.2bn.
SpaceX as a whole is not profitable, however, and has lost $1.1bn so far this year. Musk became the world’s first paper trillionaire after the company’s stock market debut earlier this year.
Over the past year, Musk has moved to bring more of his companies under fewer banners. Before SpaceX went public earlier this year, it acquired xAI and X, the platform formerly known as Twitter, both of which Musk owned. Since its debut, SpaceX has outstripped Tesla on the stock market in terms of value.
