Elon Musk has confirmed that Tesla and SpaceX are exploring a merger, telling analysts on SpaceX's earnings call on Tuesday that the idea has "a lot of merit", according to BBC News (bbc.co.uk). The confirmation came as SpaceX reported its first quarterly profit since listing and Tesla, which reported its own results the following day, disclosed a fall in profit. Musk said special committees of independent directors at both companies had been formed at the request of shareholders to examine the move, but stressed that no terms had been agreed and that a deal was far from assured.
What Musk actually said
Speaking on the call, Musk described himself as a "conflicted party" because he is chief executive of both companies, and compared commenting on the possibility to "tap dancing through a minefield". He said the special committees "have not reached agreement on terms of any transaction and there's no guarantee that they will", but added: "I do think there is a lot of merit to merging and a lot to be gained." CBS News (cbsnews.com) reported that Musk told investors he sees "a lot of merit to combining the companies", and that the committees "consist of independent directors".
The scale is unusual. BBC News put Tesla's value at roughly $1.5 trillion and SpaceX at $2 trillion, which would make a combination one of the largest mergers in history. CBS News cited Dan Ives, partner and senior managing director at Yorkville Ives & Co., who told the broadcaster the deal would likely be valued at close to $5 trillion, and who assigns an 80% to 90% chance that the merger happens by the end of 2027. Ives also argued that Tesla shareholders would likely demand a premium, suggesting a price "likely in the $500/$550 per share range".
The vote that decides it
Musk was explicit that shareholders, not management, hold the outcome. He said at least 50% of Tesla's shareholders would need to approve a combination, and described that as "quite a high hurdle to achieve". CBS News reported his warning that "some people out there assume that a SpaceX and Tesla merger is a certainty, and I think that would be overstating it". Euronews (euronews.com) reported the same threshold, noting that any deal would need the backing of a majority of all Tesla shares, not just those voted.
Musk's own position complicates the governance picture. Euronews reported that he owned 48.4% of SpaceX as of 30 June, according to a regulatory filing, and controls more than 82% of its voting power through shares carrying enhanced voting rights. He is chief executive of both companies and also serves as chairman and chief technology officer of SpaceX.
Why the two companies are being pushed together
The strategic logic Musk set out centres on artificial intelligence, chip design, robotics and space-based computing. CBS News reported him citing "super intelligence software, chip design, the Terafab obviously, robotics, mass to orbit with the Starmind constellation". The Terafab chip factory, a joint manufacturing effort between Tesla and SpaceX, is the clearest existing example of the companies operating as one. SpaceX also owns xAI, the AI unit behind the Grok chatbot, after acquiring it and X before listing.
Tesla's own centre of gravity has moved. CBS News reported that Musk said in January the company would phase out production of its Model S and Model X vehicles, shifting towards autonomous products including self-driving taxis and humanoid robots, with the Optimus robot potentially reaching the market in 2027 and eventual output of 1 million humanoid robots a year.
The financial backdrop
SpaceX's results give the merger talk a firmer footing. Euronews reported net income of $4.4 billion for the July–September period, against a loss of $1.1 billion a year earlier, with revenue up 161% to $14.6 billion. The AI division, which SpaceX now calls "Super Intelligence", drove the turnaround: revenue rose more than ninefold to $7.6 billion, overtaking Starlink as the largest source of sales, and the unit posted an operating profit of $431 million against a loss of $1.7 billion a year earlier.
Starlink revenue grew 69% to $5.2 billion, with consumer subscribers reaching 13.6 million, though average monthly revenue per consumer fell to $69 from $83. Spending remains heavy: SpaceX invested $19.6 billion in the quarter, of which $16.4 billion went to AI, bringing capital spending for the first nine months to $48 billion. Computing capacity reached 1.7 gigawatts, and Musk said he was "fairly confident" SpaceX could add 10 gigawatts in 2027, while noting that power, cooling and electrical equipment were "somewhat of a limiting factor".
BBC News reported that SpaceX as a whole is not profitable despite revenue jumping to $27 billion from $13.7 billion over the first nine months of the year, with a $1.1 billion loss over that period. The sources also differ in emphasis on the market reaction: BBC News reported SpaceX shares rose 8% in after-hours trading and Tesla 2%, while CBS News reported Tesla rising 3.8% to $387.72 and SpaceX 9.9% to $162.41 in morning trading, and Euronews reported SpaceX up nearly 5% after hours.
Commercial Impact
For investors, the immediate question is valuation and the premium Tesla holders would require. Ives's $500/$550 per share range, reported by CBS News, implies a materially higher price than Tesla's trading level cited in the same report, and that gap is the crux of any negotiation. For suppliers and partners, a combined entity would concentrate demand across semiconductors, data-centre power and launch capacity, with the Terafab project already tying the two together. For competitors in AI cloud capacity, SpaceX's cloud agreements with Anthropic and Google, reported by Euronews, show the company is now a serious seller of compute rather than only a satellite operator.
Risks and Unknowns
The special committees have not agreed terms, and Musk has said there is no guarantee they will. The 50% threshold across all Tesla shares is a genuine obstacle, not a formality. SpaceX's Starshield business is also under scrutiny over claims that Ukraine's access to the network has been limited; BBC News reported that US President Donald Trump has denied either he or Musk ordered a slowdown, and that Musk suggested the US government might have been behind the restrictions. That dispute sits alongside the merger question and could affect how regulators and governments view a more concentrated Musk entity. Tesla's falling profit adds a further unknown: whether shareholders see the combination as a rescue or a dilution of the car business they own.
FY Outlook
The next milestones are the special committees' conclusions, any agreed exchange ratio, and the Tesla shareholder vote. Ives's 80% to 90% probability, reported by CBS News, is a market view rather than a company statement, and Musk's own language is notably more cautious. Watch Tesla's full results and any disclosure on the Terafab build-out for signals on how far the two companies are already operating as one.
Sources and References
Why It Matters
A combination of Tesla and SpaceX would concentrate Musk's AI, satellite, launch and robotics assets into a single listed entity worth trillions, reshaping competition in AI compute, satellite connectivity and autonomous vehicles. The 50% Tesla shareholder threshold makes the vote, not the boardroom, the decisive arena.
