Musk explores Tesla–SpaceX merger with more than $3.3 trillion at stake

Tesla and SpaceX are exploring a merger that could unite Elon Musk’s two most important companies. Musk, who heads both US businesses, confirmed the move on Tuesday, 20 October, during a video conference on SpaceX’s quarterly results. Both companies have appointed special committees at shareholders’ request, but no terms have been agreed.

A long-discussed possibility has thus become a formal review. SpaceX currently has a stock market value of more than $1.9 trillion, while Tesla is worth around $1.48 trillion. Their combined value exceeds $3.3 trillion — an extraordinary scale for any merger. Those valuations, however, should not be confused with an agreed transaction price.

Musk personally supports the idea but cautioned that the committees might fail to reach agreement. He is not serving on either because of potential conflicts of interest: he runs both companies and is a major shareholder in each.

What connects rockets and cars?

An electric carmaker and a space company might seem unlikely partners. Musk’s rationale rests less on their original products than on the technologies he wants both to pursue: artificial intelligence, chips, software and robotics.

His vision for Tesla is to move beyond predominantly selling electric cars towards self-driving robotaxis and humanoid robots. Both markets are fiercely competitive. SpaceX began with rocket launches, but its business now chiefly comes from the Starlink satellite internet service and AI data centres. Before its stock market flotation, SpaceX had already acquired Musk’s AI company, xAI.

The commercial argument is that a combined group could bring computing power and AI infrastructure together with the vehicles and robots that deploy those technologies in the physical world. Whether that creates sufficient benefits to justify a merger remains unanswered. The companies can also collaborate without sharing a corporate structure.

They already do so on Terafab, a planned US chip factory, although work has so far only reached the site-clearance stage. Another joint project involves SpaceX cold-gas rocket thrusters for certain versions of a new Tesla sports car. Musk envisages production beginning in 2028. Both ventures illustrate the companies’ convergence, but neither yet demonstrates that a merger would succeed commercially.

Musk’s control is also at stake

Alongside the industrial rationale sits a question of power. At SpaceX, shares carrying enhanced voting rights already give Musk full control. At Tesla, a majority of shareholders often backs him, but his position is not secured in the same way.

Musk has sought a larger Tesla stake for years. He has made clear that he does not want to build a “robot army” there while others could remove him as chief executive. Combining Tesla with SpaceX could give him the lasting control he has been seeking. Much would depend on the deal’s precise structure.

Last year, Tesla shareholders offered him the prospect of an enormous share package, conditional on the company meeting demanding targets. A takeover of Tesla would render those requirements inapplicable. His interests and those of other shareholders are therefore not necessarily aligned.

The special committees must examine more than shared technology projects: the terms of any transaction and the interests of each company’s shareholders are central. Musk also highlighted a substantial approval hurdle. At least 50 per cent of all Tesla shareholders would have to support the move. His personal backing alone is not enough.

Strong results, ambitious expectations

The merger review coincides with rapid growth at SpaceX. Third-quarter profit reached $4.4 billion, compared with a loss of just over $1 billion a year earlier. Revenue rose from around $5.58 billion to $14.58 billion, driven by satellite internet and AI data centres.

Nevertheless, both companies’ lofty market valuations rely heavily on expectations of future growth. Tesla’s robotaxis and robots have yet to realise their commercial potential. SpaceX’s plans extend to data centres in Earth orbit, whose feasibility remains disputed.

Musk’s ambitions for the space business are also considerable. He wants Starship to launch twice a week towards the end of 2027, following 14 test flights so far. In August, he was still promising daily launches. Starlink’s satellite fleet is intended to grow from slightly more than 10,000 to 100,000 within three years. Substantial work remains between those announcements and their delivery.

What investors in Switzerland should watch

For Switzerland, the immediate significance is chiefly for investors holding Tesla or SpaceX shares directly or through investment products. A merger would bring previously separate holdings into a single group. The opportunities offered by shared technologies would come with greater concentration on Musk’s strategy and his ability to execute it.

Swiss investors also face exchange-rate risk when investing in dollar-denominated assets. A rise in share prices does not necessarily translate into an equivalent gain in Swiss francs. Currency movements therefore remain a separate consideration alongside the merits of any proposed transaction.

For now, there are no final merger terms to assess. The relative valuations assigned to the two businesses in a deal, the future ownership structure and the timetable all remain open. These details would determine what shareholders were actually being asked to approve, rather than the combined market value alone.

Tesla is due to publish its own quarterly results on Wednesday, 21 October, providing the next insight into the prospective partner’s current business. Until the committees present their findings, a merger remains a significant possibility — not an agreed deal.