Potential merger of SpaceX and Tesla could strengthen Elon Musk's control over the companies

Elon Musk is studying the possibility of merging SpaceX and Tesla. Both organizations have established special committees to evaluate the deal, which could potentially become the largest corporate combination in history, valued at approximately $3.5 trillion.

SpaceX was founded by Musk in 2002 with the goal of reducing spaceflight costs and ultimately sending humans to Mars. Its reusable Falcon 9 rockets dominate the global launch market, the Dragon capsule delivers NASA astronauts to the International Space Station, and the Starlink satellite network provides internet worldwide.

The company has ceased to be solely a rocket manufacturer. In February, it acquired xAI, Musk's artificial intelligence startup known for its chatbot Grok, which took control of the social network X in 2025. SpaceX went public this year with a record offering and is now valued at approximately $2 trillion. A significant part of its recent growth is linked to renting out data center computing power to other AI companies.

Tesla was founded in 2003 and became a globally recognized electric vehicle manufacturer after Musk took over as CEO in 2008. Its valuation is around $1.5 trillion. The company's core automotive business faces pressure, and Musk increasingly presents Tesla as a company focused on robotaxis with autonomous driving capabilities and the humanoid robot Optimus.

Reasons for a possible merger

Musk told analysts on Tuesday that the merger would be a 'good idea.' Florian Frischmut from consulting firm Envorso noted that the combined entity could centrally control key AI components—chips, energy, and connectivity. Garrett Nelson of CFRA Research wrote in his note that the synergistic effect would likely be minor compared to the size of the deal, which he believes would mainly concern control.

Musk owns about 82 percent of SpaceX's voting shares but only about 20 percent in Tesla, where his actions have drawn the attention of investors and lawsuits.

How easily will this happen

Most analysts expect the deal to close. Dan Ives of Yorkville Ives told AFP that, in his opinion, after Musk discusses the deal, the question is not whether it will happen, but when. He assessed the chances at 90 percent by early 2027 and suggested that Tesla would likely need to be valued above $500 per share to gain approval.

However, Musk warned that the merger is not guaranteed; it requires support from the majority of all Tesla shares, which he called a 'quite high barrier.' Nevertheless, Nelson noted that loyal retail investors own an estimated 25–27 percent of Tesla shares. Considering Musk's stake, only a small portion of institutional investors would be needed to support the deal.

Legal hurdles appear minimal, as both companies have moved their registration from Delaware to Texas, according to Ann Lipton, a law professor at the University of Colorado. In Texas, shareholders challenging the deal must first prove fraud or intentional misconduct, and companies can require that certain lawsuits be filed only by holders of 3 percent of shares. In SpaceX, this corresponds to approximately $60 billion in shares.

Lipton stated: 'I think it won't be difficult for Musk to push through the deal from a corporate standpoint. He just needs to manage to push something through.'

What are the obstacles

Lipton pointed out that more serious risks relate to SpaceX's importance to the US government and Tesla's operations in China. SpaceX heavily relies on contracts with NASA and the Pentagon, and Musk has invested hundreds of millions of dollars in Republican campaigns. Analysts believe that if Democrats regain power in Washington, investigations into Musk's companies could resume, and SpaceX could eventually face difficulties securing government contracts. Musk cautioned Democrats against targeting him if they regain power.

He wrote on X, responding to a report on Democratic plans to investigate his activities if they win the midterms: 'Live by the sword, die by the sword.' Tesla's large manufacturing complex in China could also attract national security scrutiny. JPMorgan analysts proposed one option: isolating Tesla's Chinese business or transferring control of it to a consortium from China, similar to the agreement made for TikTok in the United States.

Elon Musk stated on Tuesday his support for a potential merger between SpaceX and Tesla. This statement came amidst news that the rocket and AI company achieved quarterly profit for the first time since its IPO, driven by contracts to rent computing power to artificial intelligence firms.

During a conversation with analysts, when asked about a possible consolidation, Musk noted that he feels like he is 'dancing on a minefield,' but believes such a merger 'would be a good idea.' Following these comments, SpaceX shares rose nearly five percent in over-the-counter trading.

Musk reported that special committees of independent directors have been established in both companies, SpaceX and Tesla, to study this idea at the request of shareholders. Nevertheless, he emphasized that he cannot participate in the discussions due to a conflict of interest.

He clarified that he is the CEO of both companies, as well as the Chairman and CTO of SpaceX. According to regulatory filings, as of June 30, he owned 48.4 percent of SpaceX and controls over 82 percent of its voting power through super-voting shares. Additionally, he owns about 20 percent of Tesla.

Musk warned that the committees have not yet agreed on the terms of any deal, and there is no guarantee they will. He noted that viewing the merger as a certainty would be an exaggeration. He also pointed out that any deal would require approval from the majority of all Tesla shares, not just those cast votes, which he called a 'quite high barrier.'

In his view, both companies could benefit from collaboration in AI software, chip design, robotics, and space computing.

Financial Results of SpaceX

These remarks came after SpaceX announced a net profit of $4.4 billion for the period from July to September, contrasting with a loss of $1.1 billion the previous year. The company's revenue increased by 161 percent, reaching $14.6 billion. These quarterly results followed a challenging start on Wall Street.

SpaceX began trading on Nasdaq on June 12 following its IPO, which priced at $135 per share and raised approximately $85.7 billion. Its first earnings report as a public company showed second-quarter revenue of $7.8 billion and a net loss of $541 million. It should be noted that the AI division, which SpaceX now calls 'Super Intelligence,' was the driving force behind this improvement.

This division generated revenue that grew more than ninefold compared to the previous year, reaching $7.6 billion, surpassing the satellite internet business Starlink as the company's largest source of sales.

Cloud Computing

SpaceX attributed its success to new cloud service agreements, wider adoption of its chatbot Grok, and the acquisition of Cursor, an AI coding startup. Among the clients of SpaceX's cloud services is Anthropic, which agreed in May to pay nearly $45 billion over three years for computing power in SpaceX's Colossus data centers. In June, Google signed an agreement to pay $920 million monthly from October to June 2029.

The AI division achieved an operating profit of $431 million, compared to a loss of $1.7 billion the previous year. Despite this, expenses remain high. SpaceX invested $19.6 billion during the quarter, of which $16.4 billion went to AI, bringing capital expenditures for the first nine months of the year to $48 billion.

The company's computing capacity reached 1.7 gigawatts, up from 0.6 gigawatts the previous year. Musk expressed confidence that SpaceX will be able to bring an additional 10 gigawatts of computing power online in 2027. This will be added to approximately 2.5–3.0 gigawatts that, according to his projections, will be operational by the end of the current year. He added that power supply, cooling, and electrical equipment are 'somewhat limiting factors.'

Revenue from the Starlink satellite internet division grew by 69 percent to $5.2 billion, and the number of consumer subscribers reached 13.6 million. However, the average monthly revenue per user decreased from $83 to $69 compared to last year. Furthermore, SpaceX conducted the first commercial flight of Starship, a massive rocket key to Musk's ambitions for Mars and large-scale satellite deployment. This flight delivered 26 next-generation Starlink satellites into orbit.

Elon Musk confirmed that the companies Tesla and SpaceX are analyzing the possibility of a merger between them. The businessman recognizes the benefits of this union but emphasizes that there is no formalized agreement on the terms of the operation and that its realization is not guaranteed.

This perspective was debated during a teleconference held on Tuesday (20), when the third-quarter financial results of SpaceX were presented. According to Musk, special committees have been established in both corporations to examine the proposal. These groups are composed of independent advisors and were instituted at the request of the shareholders, as reported by the executive.

Commenting on the viability of joining the companies, Musk stated that he considers the idea positive. As the executive director of both companies, he chose to abstain from deliberations due to potential conflicts of interest. The committees have not yet reached a consensus on the details of a future transaction.

Despite the uncertainties, Musk expressed his belief in the substantial gains that combining the businesses would provide. However, the realization of the merger is conditional upon shareholder approval. For Tesla, he specified that it will be necessary to obtain the support of at least 50% of all shares, and not just the majority of registered votes.

Musk compared the situation to a sensitive scenario given his leadership position in both firms. For this reason, he highlighted that the independent committees must present a suggestion that will subsequently be presented to investors. It is relevant to note that last year, Tesla shareholders already endorsed crucial decisions related to Musk, approving a compensation package estimated at around US$1 trillion (approximately R$5.4 trillion).

Even so, a potential integration with SpaceX may face resistance from some investors in the automaker. A central open point concerns the operational structure. Wall Street analysts and legal experts, cited by The Verge, point out that it is more likely that SpaceX will acquire Tesla or incorporate it through a share swap, rather than the reverse.

Since its entry into the stock market, SpaceX has had a higher valuation than Tesla. An operation in this sense would allow the space company's shareholders to hold the largest share of control of the resulting company. If Tesla were to acquire SpaceX, it would be necessary to issue millions of new shares, which would proportionally decrease the stake of current automaker shareholders.

There are also notable disparities in the financial needs of the operations. SpaceX launch projects require tens of billions of dollars annually, expenses that could restrict Tesla's ability to invest in manufacturing new vehicles and batteries. Conversely, the union would create a single entity for investors interested in Musk's vision of the future, which encompasses autonomous cars, humanoid robots, advanced artificial intelligence, and human settlements on Mars.

Although Tesla is primarily known for its electric vehicles, Musk has been redirecting company resources towards robotics. SpaceX, meanwhile, manufactures rockets and Starlink internet satellites and is expanding its activities to provide cloud computing capacity to other technology companies, such as Anthropic and Google. According to the most recent quarterly reports, this cloud computing activity has become SpaceX's largest source of profit, generating US$7.5 billion (about R$40.5 billion), although the company recorded a loss of US$1.1 billion (about R$5.9 billion) in the current year.

The potential merger also attracted the attention of investors before Musk's announcement. At the beginning of October, Barclays released a report for clients suggesting that a combination between Tesla and SpaceX could be announced before the automaker's annual shareholder meeting, scheduled for December 3, 2026. To date, there is no confirmation that the operation will take place, depending on the work of the independent committees and, subsequently, the support of the respective company shareholders.