SpaceX, Tesla form committees to explore record merger; Musk flags shareholder hurdle

Elon Musk said SpaceX and Tesla have formed special committees to explore a potential merger, a preliminary step toward what would rank as the largest corporate tie-up of all time.

"I do think there's a lot of merit to combining the companies," Musk, chief executive of both companies, said Tuesday on SpaceX's earnings webcast. "There's a lot to be gained from cooperating on developing superintelligence software."

Musk said he is not participating in the committee discussions because he is a conflicted party, adding that the committees have yet to agree on terms. He cautioned that the deal is not guaranteed and would require shareholder support — telling investors Tesla would need approval from 50% of all shareholders, rather than simply a majority of those voting.

"Some people out there assume that a SpaceX and Tesla merger is a certainty," Musk said. "I think that would be overstating it."

A combination would unite Tesla's electric vehicle, energy and robotics businesses with SpaceX's rocket launch and satellite internet operations, underpinned by the companies' shared ambitions in artificial intelligence — what some in the industry now call superintelligence — fueling investments in areas such as data centers and driverless cars.

The scale is staggering. SpaceX, formally known as Space Exploration Technologies Corp., carries a market value of about US$2 trillion, while Tesla is worth nearly US$1.5 trillion. The two already have extensive business ties: the rocket maker has purchased more than US$100 million worth of Tesla Cybertrucks, and xAI is a major customer of Tesla's utility-scale batteries.

A combination has been widely expected since SpaceX completed a record initial public offering in 2025, giving the company currency and an implicit green light from shareholders to make a play for Tesla. Bloomberg News reported in January that SpaceX had weighed a Tesla merger before ultimately deciding to acquire xAI, Musk's AI startup. Speculation has intensified recently, with Barclays suggesting last week that a deal could be announced before Tesla's annual meeting in December.

The prospective tie-up was a priority for investors heading into Tuesday's results. "When will SpaceX merge with Tesla?" was the second-most upvoted question — drawing 26 upvotes — submitted to SpaceX management ahead of its third-quarter earnings webcast, according to wkzo.com's report on the investor question list. The same question drew 128 upvotes on Tesla's investor relations site, the report said.

The top-voted question, with 38 upvotes, concerned the progress of Starship's lunar lander hardware, wkzo.com reported, noting that key technologies needed to turn the giant rocket into a lunar lander — including refueling it in orbit — have yet to be fully demonstrated.

The merger talk came alongside a strong quarter. SpaceX posted its first profit as a public company, with revenue climbing 161% to US$14.58 billion for the three months ended September 30 from a year earlier. AI revenue surged nearly tenfold to US$7.56 billion, mostly from renting out data-center capacity to developers including Anthropic, Alphabet's Google and Reflection AI rather than from its own models.

"We are in an inflection moment for SpaceX across launch, connectivity and superintelligence," Musk said on the call. He ended his prepared remarks with a seemingly off-script note: "In a nutshell, what this implies for SpaceX annual recurring revenue by the end of '27 is somewhere between $500 billion and a trillion."

Capital expenses nearly tripled as compute infrastructure spending remains heavy. SpaceX's profitable satellite internet service, Starlink, is helping to bankroll spending on chips, terrestrial data centers and Grok, though losses at the AI businesses have ballooned, according to wkzo.com. AI revenue comes from a handful of customers — including Google and Anthropic — and the compute contracts can be terminated on about 90 days' notice, the report said. Some institutional investors also asked how much contracted Google capacity would remain available if a court halted gas turbines at the Colossus 2 data center in Memphis, Tennessee.

Investors responded to the news and the results. SpaceX shares rose 8.1% in post-market trading after reporting quarterly results, while Tesla climbed 1.8%. Tesla is scheduled to release its own third-quarter results on Thursday.

Asked whether he favored the merger, Musk was pointed: "I think it would be a good idea, but it's really up to the special committees of both companies."