Elon Musk Says a Tesla–SpaceX Merger Could Work. Here's What It Would Mean

Elon Musk has put one of Wall Street's favorite rumors back on the front page. Speaking on SpaceX's third-quarter earnings call on Tuesday, the billionaire — CEO of both SpaceX and Tesla — revealed that the boards of both companies have formed special committees of independent directors to review a possible merger, according to news coverage from multiple outlets including CNN, TechCrunch and MarketWatch.

Musk said the committees were created at the request of shareholders, and that he personally supports the idea. "Do I think it would be a good idea? Yes," he said during the call. But he also cautioned against assuming the deal will happen: the committees have not agreed on any terms, and there is "no guarantee" they will. "Some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it," he added.

The odd kabuki dance

One of the most striking details in the announcement is that Musk — the man who would benefit most from a merger — cannot take part in the talks at all. "Because I'm a conflicted party, I can't actually be in the discussions of the special committees," he told investors. "So it's an odd kabuki dance where two groups of people are talking and I can't be in the conversation."

The committees are made up of independent directors from each company. Tesla has seven independent board members under Nasdaq listing standards, including board chair Robyn Denholm, former Tesla CTO JB Straubel, James Murdoch and others, according to the company's proxy filing. SpaceX lists six independent directors, including venture capitalists Ira Ehrenpreis — who sits on both boards — Steve Jurvetson and Luke Nosek. Neither Musk nor his brother Kimbal qualifies as independent, and Musk did not name the committee members.

Shareholders will have the final word. Musk noted that on Tesla's side, approval would require a majority of all outstanding shares — not just the shares voted — which he called "quite a high hurdle." Tesla shareholders have historically backed Musk's proposals, but a merger of this size would still need broad support.

Why Musk wants to merge the two companies

Musk's strategic case for the deal centers on what he calls "superintelligence" — the artificial intelligence ambitions shared by both companies. He pointed to several areas where Tesla and SpaceX already overlap: AI software, chip design, the joint Tesla–SpaceX "Terafab" semiconductor project, robotics, and mass-to-orbit launch capability tied to the Starlink satellite constellation.

"There's a lot to be gained from cooperating on developing superintelligence software, chip design, the Terafab, obviously, robotics, mass to orbit with the Starlink constellation. Connectivity," Musk said on the call.

The two companies already work together on a number of projects. Tesla and SpaceX have collaborated on the Roadster sports car, which is set to use SpaceX cold-gas thrusters, and on the Terafab chip-making effort. Tesla also supplies its energy-storage products and electric vehicles to SpaceX — a customer relationship that would become an internal transfer under one corporate roof.

The merger talk also comes as SpaceX's business is being reshaped by AI. In its second earnings report since going public, SpaceX said it brought in net income of $4.4 billion in the third quarter — swinging to a profit after back-to-back quarterly losses earlier this year — on revenue of $14.6 billion, up 161% year over year. The company's "Super Intelligence" segment, which includes its AI operations, became its largest revenue segment in the quarter, underscoring how central AI has become to Musk's expanding empire. The firm also reported $63 billion in backlog, or contracted revenue yet to be recognized.

Investors reacted quickly: SpaceX shares rose as much as 8% in late trading, while Tesla shares climbed about 2% in extended trading on Tuesday. One analysis cited in coverage estimated that a combined company could be worth roughly $3.5 trillion — a giant spanning AI, space exploration and electric-vehicle manufacturing.

An empire being assembled

The potential merger is the latest step in the consolidation of Musk's business empire. SpaceX acquired Musk's xAI — the developer of the Grok chatbot, now known as SpaceXAI — in February, and with it the social media platform X, which xAI had previously absorbed. Folding Tesla into the same corporate group would unite rockets, satellites, AI, social media and electric cars under a single umbrella, all driven by Musk's superintelligence vision.

Speculation had been building for weeks. Investor interest was piqued when Barclays analyst Dan Levy said in an October 14 client note that a merger could be announced ahead of Tesla's annual meeting in December — though proxy materials released this week showed a bare-bones agenda for that meeting, suggesting such a timeline is unlikely now.

Wall Street has treated a Tesla–SpaceX combination as a "when, not if" scenario for months, especially as SpaceX's AI business became its biggest revenue line. Tuesday's call turned the rumor into a formal process for the first time — two special committees, a declared shareholder hurdle, and Musk publicly on the record backing the idea.

What happens next

For now, the committees have a job to do: independent directors must negotiate the terms of any transaction — valuation, share exchange ratios, governance — without Musk in the room. Only if they reach an agreement would the proposal go to shareholders, where Tesla's all-outstanding-shares threshold would test the depth of investor support.

Regulatory review would also be a factor. A merger of this size would almost certainly draw scrutiny from antitrust authorities, particularly given the concentration of AI, launch and EV assets in one company. And while Tesla sells energy storage and cars to SpaceX today, merging a public carmaker with a space company would be one of the most unusual combinations in corporate history.

Musk himself framed it as a possibility rather than a promise. The committees were set up at shareholders' request, he said — and "at this point," they have not reached agreement on the terms of any transaction. Whether the "odd kabuki dance" ends with the biggest corporate merger ever attempted, or with two committees walking away, will be one of the most watched corporate stories of the year — and one that markets worldwide are already pricing in.

As the story trends per news coverage, one thing is already clear: after years of Musk dodging the merger question on earnings calls — in July, following SpaceX's blockbuster IPO, he said such matters "can't be talked about" on a call — he has now gone on the record. The process is real, the hurdles are high, and the outcome will reshape both companies.

Musk's companies keep intersecting with public policy too: he has pledged a SpaceX share for every US child under the proposed Trump Accounts.