Elon Musk stated that merging Tesla and SpaceX is a good idea, confirming this on Tuesday when asked about the topic. Musk highlighted that "a lot can be gained" from such a deal, but warned that there are no guarantees the merger will happen and that nothing has been agreed.
Musk, who is the chief executive of both Tesla and SpaceX, said that special committees have been established to evaluate the potential deal. He has built the companies over the years into a pair of tech empires worth trillions of dollars. Tesla is valued at approximately $1.5 trillion (£1.1 trillion), while SpaceX is valued at $2 trillion (£1.5 trillion). The combination of the two companies would be the largest merger ever.
Musk said that merging the companies would be beneficial given their work on chips, artificial intelligence and other technological projects. The deal would combine Tesla's cars, robots and self-driving technology with SpaceX's rockets, data centres, satellites and telecommunications operations. The move could be a step towards Musk's mission to build a self-sustaining city on Mars.
Over the past year, Musk has consolidated his businesses, with SpaceX acquiring xAI and X, formerly known as Twitter, before it went public this year. Shareholders will ultimately decide on the merger, requiring half of Tesla's shareholders to support the deal. Musk described this threshold as a "quite high hurdle". As the chief executive of both companies, he cannot participate in shareholder discussions.
David Nicholson, chief technology advisor at market research firm The Futurum Group, said: "In my opinion, 100%. It is just a matter of when." Last week, the Tesla Roadster was unveiled, a futuristic electric car powered by SpaceX rocket thrusters. Nicholson assessed that the unveiling served as a "symbolic embodiment" hinting at the merger of Musk's two companies.
Dan Sheehan, an investment analyst at Telos Wealth Advisors, said that Musk, as a key shareholder of Tesla, will likely get his way in the next few years. Sheehan believes shareholders will support the deal because the technologies the companies are developing complement each other. He added that the merger would mean Tesla shareholders would likely hold a "smaller piece of a much larger and more complex business". "There is no real precedent for how a public company like Tesla is valued in this," Sheehan said.
SpaceX shares rose 8 per cent in after-hours trading, while Tesla shares rose 1.5 per cent. Experts told the BBC that Tesla drivers are unlikely to see major drastic changes in the near future, even if the two companies merge. Nicholson said the vehicles seem like an "afterthought", overshadowed by the potential of combining the technological capabilities of Tesla and SpaceX.
Tesla said earlier this year that it would prioritise its best-selling models, the Model Y and Model 3, shifting focus from less popular models. The company has also begun using a manufacturing plant in California to produce humanoid robots known as Optimus. Sheehan said that pairing Tesla's self-driving and robotics technology with SpaceX's AI and satellite network could result in more capable vehicles. "The question is how much priority cars get within a company increasingly driven by AI infrastructure," he added.
Tu Le, founder of consultancy Sino Auto Insights, said that the recent Roadster unveiling suggests that SpaceX technology could be integrated into future Tesla products, which could attract more customers. The Cybertruck maker faces intense competition from Chinese carmakers such as BYD, which overtook Tesla as the world's largest electric vehicle manufacturer in January.
Musk is the world's richest man and earlier this year became the world's first trillionaire. The merger would give him greater voting control over the combined company than he currently has in Tesla. Sheehan said that one company makes it easier for Musk to run his AI strategy as he wishes. "The deal itself does not add to Musk's wealth, but it further concentrates it in one stock," Sheehan said.
Nicholson said that the merger could draw public attention to Musk, already a polarising figure in the US. The move could also face greater regulatory pressure if Democrats, many of whom have criticised Musk, win more seats in the US mid-term elections next month. Last year, Tesla investors approved an unprecedented compensation package for Musk worth approximately $1 trillion. "Honestly, I don't think Musk will care what the merger does to his wealth," Nicholson said, adding that the deal brings Musk closer to what he calls his "life mission": the colonisation of Mars.
