Elon Musk says Tesla-SpaceX merger being considered

Elon Musk has expressed his enthusiasm for the potential merger of Tesla and SpaceX, two of his most prominent ventures, indicating that the idea is currently being actively considered. During a conference call with financial analysts discussing SpaceX's quarterly results on Tuesday, Musk stated, "Do I think it would be a good idea? Yes."

However, Musk cautioned that the merger is not a certainty and would require the backing of shareholders. He revealed that both companies have established special committees to explore the feasibility of such a move. "The special committees have not reached agreement on terms of any transaction and there's no guarantee that they will," he noted. Nevertheless, Musk believes there is significant value in merging the two companies.

With Tesla's market valuation estimated at around $1.5 trillion and SpaceX's at approximately $2 trillion, a merger would represent one of the largest consolidations in corporate history. Following Musk's remarks, SpaceX's shares experienced an 8% increase in after-hours trading.

SpaceX, known for its development of space rockets and Starlink internet satellites, is also venturing into the cloud computing sector, providing services to tech giants like Anthropic and Google. This new business line has proven to be highly lucrative, contributing $7.5 billion to SpaceX's revenue according to the latest quarterly figures. Additionally, Starlink generated $5.2 billion in revenue. Despite these successes, SpaceX as a whole remains unprofitable, having reported a loss of $1.1 billion so far this year.

On the other hand, Tesla's stock rose by 2% following Musk's comments, a welcome change after a period of slight declines. The company is set to release its quarterly results on Wednesday.

In recent months, Musk has been consolidating his various enterprises under fewer banners. Earlier this year, SpaceX acquired xAI and X, the platform formerly known as Twitter, both of which are under Musk’s ownership. The recent launch of Terafab, a collaborative initiative to produce computer chips between Tesla and SpaceX, further emphasizes Musk's vision of enhanced synergy between his companies.

Musk articulated that a full merger would be advantageous given the overlapping work in areas such as chip manufacturing, artificial intelligence, and software development. He acknowledged his dual role as CEO of both companies, referring to himself as a "conflicted party" in the potential merger discussions. He likened the situation to "tap dancing through a minefield," highlighting the complexities involved.

Ultimately, Musk stressed that any decision regarding a merger would rest with the shareholders, noting that at least 50% of Tesla's shareholders would need to give their approval. He described this threshold as a "quite a high hurdle to achieve." Following its stock market debut, SpaceX quickly surpassed Tesla in market valuation, reflecting its growing focus on AI infrastructure and innovation.