Tesla and SpaceX boards consider merger, Musk says

Elon Musk said Tuesday that independent directors at Tesla and SpaceX have formed separate committees to consider merging the two companies, but warned that a deal is far from certain and would need shareholder approval.

“The special committees have not reached agreement on terms of any transaction and there’s no guarantee that they will,” Musk said during a call with financial analysts about SpaceX’s quarterly results. “But I do think there is a lot of merit to merging and a lot to be gained.”

Musk, the chief executive of both companies, said he is not part of either committee or involved in the talks because he is a “conflicted party.” He did not identify the directors serving on the committees, according to NBC News.

“I think some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it,” he said. He described the discussions as an “odd Kabuki dance” in which others are talking while he cannot participate. Even answering an analyst’s question about the proposal felt like “dancing through a minefield,” NBC News reported.

Musk nevertheless endorsed closer ties. “I do think there’s a lot of merit to combining the companies, as we are pretty much in the superintelligence singularity, and there’s a lot to be gained from cooperating,” he said. He cited work involving artificial intelligence software, chip design and robotics as areas of current or potential cooperation.

The companies already have some overlapping interests. Tesla announced in January that it was investing about $2 billion to buy shares in an AI startup that is a SpaceX subsidiary, according to NBC News. The BBC also pointed to Terafab, a joint Tesla-SpaceX effort to manufacture computer chips, as an example of the companies working together.

The scale of a possible transaction would be enormous. Tesla is valued at roughly $1.5 trillion and SpaceX at $2 trillion, according to the BBC. Musk said shareholders of both companies would have to support a merger. At least 50% of Tesla shareholders would need to approve it, a threshold he called “quite a high hurdle to achieve,” the BBC reported.

SpaceX’s quarterly results surpassed estimates, and its revenue more than doubled in part because it rented computing capacity to other AI companies, NBC News reported. The BBC said that business brought in $7.5 billion in the latest quarter, making it SpaceX’s most profitable line of business, while its Starlink satellite internet service generated $5.2 billion in revenue. SpaceX as a whole has lost $1.1 billion so far this year, the BBC reported.

SpaceX shares rose 8% in after-hours trading, while Tesla shares gained 2%, according to the BBC. Tesla was due to report its own quarterly results Wednesday.

Musk has already combined other businesses he owns. NBC News reported that his social media company X merged with his AI startup xAI last year, before SpaceX acquired xAI in February. Musk has since renamed the AI business SpaceXSI, the outlet reported.