SpaceX and Tesla Are Weighing a $3.5 Trillion Merger. Musk Wants It, but He Can't Be in the Room.

Elon Musk runs two of the most valuable companies on Earth: SpaceX, the rocket, satellite and SI company, and Tesla, the electric carmaker. On Tuesday, he said the boards of both have formed special committees of independent directors to study merging them, NBC News reported. Musk said he thinks it's a good idea.

The numbers are enormous. SpaceX is worth about $2 trillion and Tesla about $1.5 trillion, so a combined company would be valued near $3.5 trillion, Fortune reported. That would be the biggest corporate merger ever, according to Bloomberg. Investors liked what they heard. SpaceX shares rose as much as 12% Wednesday and Tesla gained more than 3%, Reuters reported.

Musk made the news on SpaceX's third-quarter earnings call, in answer to an analyst's question. "Do I think it would be a good idea? Yes," he said, the BBC reported. Then he laid out why: "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 on developing superintelligence software, chip design, the Terafab obviously, robotics, mass-to-orbit with the Starmind constellation, connectivity," Fox Business reported.

"An odd kabuki dance"

Musk is the CEO and the largest individual shareholder of both companies. That puts him on both sides of any deal, so under securities rules he counts as a conflicted party, NBC News noted. He can't sit on either committee or join the talks. "This is definitely the kind of question where I feel like I'm tap dancing through a minefield," he said, Fortune reported. "It's an odd kabuki dance where two groups of people are talking, and I can't be in the conversation," he added, according to TechCrunch.

Picture a father whose two grown children are deciding whether to go into business together. He can tell them he likes the idea. He can't be at the table when they haggle over who gets what.

Musk said the committees were formed at shareholders' request and have not agreed on any terms. "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, NBC News reported. He didn't name the members. Tesla's independent directors include board chair Robyn Denholm, former Tesla CTO JB Straubel and James Murdoch, while SpaceX's include venture investors Steve Jurvetson, Luke Nosek and Roelof Botha, TechCrunch reported.

The SolarCity lesson

Musk has been here before. In 2016, Tesla bought SolarCity, a solar panel company, for $2.6 billion. Musk owned about 22% of both companies and sat on both boards. Shareholders sued, seeking $13 billion from him. He won in 2022, and the Delaware Supreme Court unanimously upheld that win in 2023, a McGuireWoods summary of the ruling notes. Along the way, the justices said a special committee of independent directors is often the best practice in a deal like that, though not a requirement.

Few outlets dwelled on that history this week. It matters, because it explains the setup. This time, both boards put the independent committees in place first, before any price is on the table. The step shareholders' lawyers said was missing in 2016 is now step one.

Musk has been building toward this

The wall between Musk's companies has been coming down for a while. In March 2025, his SI startup xAI bought X in an all-stock deal that valued X at $33 billion and xAI at $80 billion, Reuters reported. On Feb. 2 of this year, SpaceX acquired xAI, valuing xAI at $250 billion and SpaceX at $1 trillion, Reuters reported. Each deal has been bigger than the last, and Tesla alone is worth about $1.5 trillion today.

Tesla and SpaceX are already tied together. Tesla put about $2 billion into xAI in January, TechCrunch reported, and after the SpaceX deal that stake became SpaceX stock, Tesla's Oct. 19 proxy filing says. The two companies are jointly building Terafab, a chip plant expected to produce its first test chip around May or June of next year, Reuters reported. SpaceX bought about $100 million worth of Tesla Cybertrucks last year, the New York Post reported. And last week's new Tesla Roadster flipped and leapt over cars using SpaceX rocket thrusters, Reuters noted.

Why SpaceX has the momentum

SpaceX went public in June in the biggest IPO ever, at a value of about $1.75 trillion, and is now worth more than $2 trillion, the Post reported. Tuesday's results showed why. Third-quarter revenue hit $14.6 billion, up 161% from a year earlier, and the company earned $4.4 billion after losing $1.05 billion in the same quarter last year, CNBC reported. Its SI business brought in about $7.6 billion, mostly by renting out data center capacity to other SI developers, Reuters reported.

Wall Street took notice. JPMorgan raised its SpaceX price target to $500 a share from $240, CNBC reported. Dan Ives of Yorkville Ives & Co. put the odds of a Tesla-SpaceX merger by the end of 2027 at 80% to 90%, according to the Post.

What it would mean for Musk

Musk owns about 20% of Tesla, the proxy shows, and about 45% of SpaceX, where special voting shares give him roughly 82% of the vote, Fortune reported. Barclays analyst Dan Levy estimated that if SpaceX bought Tesla at current values, Musk would own about 37% of the combined company and control about 56% of the vote, Yahoo Finance reported. That is well above the 25% stake in Tesla he has long said he wants.

A person familiar with the talks told Reuters they began in recent weeks and could end with SpaceX acquiring Tesla, and that Tesla has been working with an investment bank, CNBC-TV18 reported.

What happens next

First, the two committees have to agree on terms, including how many shares of one company each share of the other would be worth. Then shareholders vote. Musk flagged the hard part himself: "Particularly on the Tesla side, we will need a 50 percent vote of all shares, not just those who vote, but of all shareholders, and that's quite a high hurdle to try to achieve," NHK reported. Every share that sits unvoted counts as a no.

Don't expect that vote at Tesla's annual meeting on Dec. 3. The ballot filed Monday lists three items, electing directors, an advisory vote on pay and approving the auditor, and Tesla says it knows of no other matters. A merger would need its own vote later. Barclays has said investors see an advantage in getting a deal done under the Trump administration's friendlier approach to mergers, Yahoo Finance reported.

Tesla reports its own third-quarter results after the market closes Wednesday, CNBC reported. Investors will be listening for any word on the talks.

In 2016, Musk sat on both sides of the SolarCity deal and spent the next seven years defending it in court. This time he stepped out of the room before the first number was written down. If the committees and the shareholders say yes, the rockets, the robotaxis and the chips Musk has been building in separate shops will finally be under one roof.