SpaceX and Tesla Could Become One Company and Shareholders Hold the Final Key

Elon Musk is considering something he's never done before: fusing his two most valuable companies into one.

Asked during SpaceX's quarterly earnings call on Tuesday whether a merger would be a good idea, Musk was direct: "Yes, I think it's a good idea." He revealed that special committees have been formed at both companies, at shareholder request, to evaluate a potential deal but stressed that nothing has been agreed and there's no guarantee a merger will happen.

The numbers alone tell the story. Tesla is valued at roughly $1.5 trillion; SpaceX at around $2 trillion. Combined, they would create a $3.5 trillion behemoth far larger than any merger in corporate history.

But this isn't Musk's decision alone. As CEO of both companies, he described himself as conflicted and said he's excluded from the committees' discussions, joking that he feels like he's "tap-dancing through a minefield." More importantly, Tesla shareholders hold the final say the deal requires backing from holders of 50% of all Tesla shares, a threshold Musk himself called “quite a high hurdle.”

Over the past year, Musk has been systematically consolidating his business empire. SpaceX acquired xAI, then absorbed X (formerly Twitter), and went public this year. Last week's unveiling of the Tesla Roadster a futuristic electric car powered by SpaceX rocket thrusters was seen by analysts as a "symbolic embodiment" of the two companies converging. The firms are also already collaborating on the Terafab chip manufacturing project.

The business logic has real substance. Tesla's self-driving technology, robots, and vehicles paired with SpaceX's rockets, data centres, satellites, and telecommunications operations could form a technology loop stretching from the ground to orbit. Musk's own rationale is straightforward: the two companies do overlapping work in chips, artificial intelligence, and software, and "there's a lot to be gained" from bringing them together.

Experts told the BBC that Tesla drivers are unlikely to see dramatic changes in the near term. Vehicles may become even less of a priority inside a company increasingly driven by AI infrastructure Futurum Group's David Nicholson said cars seem almost like "an afterthought." But in the longer run, SpaceX's satellite network and AI capabilities could make future Teslas more capable, and the Roadster showcase suggests SpaceX technology could flow into future Tesla products, potentially attracting more customers.

The biggest winner is probably Musk himself the world's richest man, who became the world's first trillionaire earlier this year. The merger wouldn't add to his wealth directly, but it would concentrate it further in a single stock and give him greater voting control over the combined entity than he currently holds at Tesla. He owns roughly 85% of SpaceX's voting rights but only about 20% at Tesla; post-merger, his voting power could climb to around 57%. 

A single company also makes it easier for him to run his AI strategy the way he wants and brings him closer to what one analyst calls "his mission in life": colonising Mars.

Regulatory scrutiny, political pressure Musk is already a polarising figure in the US and the question of whether Tesla shareholders want to trade their stake in a carmaker for a smaller slice of a much larger and more complex business. When Tesla bought SolarCity in 2016, a Delaware court allowed the deal but said the company should have formed an independent committee; this time, a transaction with one man sitting on both sides of the table is likely to attract even tougher governance scrutiny.

But Tesla investors approved an unprecedented $1 trillion compensation package for Musk last year. They don't have much of a track record of telling him no. One analyst's verdict: “In my opinion, 100%. It's just a question of when.”