Musk Says a Tesla and SpaceX Merger Is a Good Idea, but He Can't Sit in the Room Where It Gets Decided

Elon Musk wants his two biggest companies to become one, and he is the one person who cannot negotiate it. On SpaceX's third quarter earnings call on Tuesday, he confirmed that the boards of SpaceX and Tesla have each formed special committees of independent directors to review a merger, created at the request of shareholders.

"Because I'm a conflicted party, I can't actually be in the discussions of the special committees," he said. "It's an odd kabuki dance where two groups of people are talking, and I can't be in the conversation."

The deal would be one of the largest mergers in history, joining Tesla, valued at roughly $1.5 trillion, with SpaceX at about $2 trillion. Markets are now being asked to price a combination whose terms nobody has agreed.

Not a done deal

Musk went out of his way to cool expectations. People who assume a SpaceX and Tesla merger is a certainty are "overstating it," he said. The committees have not reached agreement on terms. "Obviously, there's no guarantee that they will."

He still made the case. "I do think there's a lot of merit to combining companies as we are pretty much in the superintelligence singularity," he said, pointing to superintelligence software, chip design, the Terafab joint chip project, robotics, mass to orbit with the Starmind constellation and connectivity. "So I think it would be a good idea, but it's really up to the special committees of both companies." He compared even commenting on it to "tap dancing through a minefield."

Gene Munster of Deepwater Asset Management is less cautious. He said on X that he sees a 95% chance a deal happens within two years.

Tesla is the hard part

"At the end of the day, the shareholders have to be supportive of this," Musk said. On the SpaceX side that is easier: after the IPO he holds more than 50% of the voting power. Tesla is another matter. There, he said, he needs "a 50 percent vote of all shares, not just those who vote, but of all shareholders. And that's quite a high hurdle."

Tesla has seven independent directors under Nasdaq standards, including chair Robyn Denholm, according to its October 19 proxy. SpaceX lists six. Antonio Gracias, whose Valor Equity Partners holds a 3.4% SpaceX stake and financed some of its AI hardware purchases through leaseback arrangements, sits on SpaceX's board but is not independent.

Much depends on who absorbs whom. For Tesla to buy SpaceX it would have to issue millions of new shares, diluting current owners, and SpaceX's launch goals need tens of billions of dollars a year that could drain Tesla's ability to build car and battery plants. Most Wall Street analysts and legal experts, The Verge reports, expect the reverse: SpaceX acquiring Tesla or absorbing it through a stock swap. Because SpaceX has kept a higher valuation since its IPO, its holders would end up with majority control, and some Tesla shareholders may balk.

The numbers behind the pitch

SpaceX gave Musk a strong hand. Third quarter revenue hit $14.6 billion, up 161% from a year earlier and well above the $12.72 billion consensus. Net income was $4.4 billion, against a $1.05 billion loss a year ago. Its AI unit, which it calls Super Intelligence, is now its largest business, with revenue up ninefold to $7.56 billion. It is the same AI build-out behind SpaceX's plan to borrow $40 billion for Nvidia chips.

SpaceX guided to $33 billion to $37 billion in revenue for the first quarter of 2027, far above the $22.2 billion analysts had expected. Its shares rose 10.4% in premarket trading Wednesday. Tesla was up 2.1% premarket ahead of its own third quarter results after the close.

SpaceX listed on Nasdaq in June in the biggest IPO ever, and the debut made Musk the first paper trillionaire. Whether his two empires become one now rests with two committees whose talks he says he cannot join, and then with Tesla's shareholders.

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