Elon Musk stated that Tesla and SpaceX have established a merger discussion committee. What considerations underlie this move, and how likely is a merger?

Now put the two pieces together. A merger would allow Musk to trigger a higher tier in his compensation wager; it would lift his equity stake from 19.9% straight over the threshold; and it would weld control of both companies into a single hand. The person who stands to gain most financially from the deal happens to be CEO of both firms—how, then, could he convince shareholders that the price is fair? That’s why he was excluded from the committee—not out of moral scruples, but because legally, this conflict of interest is unavoidable. The real roadblock lies in the voting rules. For Tesla, approval requires support from 50% of all outstanding shares—not merely 50% of those who vote. With many retail investors abstaining, their silence effectively counts as a 'no' vote. Musk himself admitted this bar is extremely high and difficult to clear. Meanwhile, SpaceX just completed a record-breaking IPO this year, and its shareholder base bears almost no overlap with Tesla’s. Getting two such distinct groups to jointly endorse the same transaction raises an extraordinarily steep hurdle. Valuation stands as the first and most formidable obstacle. SpaceX’s valuation exceeds $2 trillion—driven by sky-high price-to-sales multiples and private-market pricing—while Tesla’s $1.5 trillion market cap reflects daily public-market trading. Which company absorbs which? What premium applies? How should the share-swap ratio be calculated? Just resolving this one issue could take a full year—and would require two separate teams of financial advisors, each issuing independent fairness opinions. Without alignment on valuation, even the most compelling narrative collapses under accounting reality. Don’t forget the concerns of two sovereign nations. Shanghai Gigafactory accounts for over 45% of Tesla’s global output—and serves as its largest export hub. On the SpaceX side, Starshield has built spy satellite networks for the U.S. National Reconnaissance Office; its ‘Golden Dome’ missile defense tracking system and 18 military launches for the U.S. Space Force are all documented in publicly available contracts. Merging a company deeply embedded in China’s automotive manufacturing ecosystem—and holding vast amounts of Chinese user data—with a firm executing sensitive U.S. military space missions transcends antitrust concerns: it becomes a matter of national sovereignty. Merger talks won’t begin until dual national security reviews align—and those two review systems fundamentally clash. Stitching together a unified story is easy; reconciling two separate balance sheets is hard. Should forced divestitures become necessary, the first to feel the chill won’t be stock prices—but Shanghai-based suppliers and workers. Among these new developments, what unsettles me most is the ‘Super Intelligence’ division. As Bloomberg reported in January, SpaceX had previously considered merging with Tesla, but instead acquired Musk’s own xAI first—absorbing Super Intelligence software, Grok, and the Terafab chip project. If a merger materializes, Tesla essentially reacquires AI’s imaginative potential. Yet after extensive digging, I couldn’t determine how much of SpaceX’s $7.6 billion in revenue stems from related-party transactions. Their dealings have never been purely arm’s-length: SpaceX purchased over $100 million worth of Tesla Cybertrucks; xAI is a major customer for Tesla’s energy storage batteries. Circular flows may look impressive—but break any link in that chain, and both sides wobble. What Wall Street truly wants isn’t the deal itself—it’s the story. A conglomerate capable of narrating coherent, synergistic tales across AI, robotics, satellites, rockets, and electric vehicles is precisely the kind of mega-narrative U.S. equities lack—the very successor thread to NVIDIA. Even Cathie Wood of ARK Invest declared: a merger within five years could send Tesla’s stock to 11 times its current level by 2031. Merely establishing the plausibility of that story—regardless of execution—becomes a self-fulfilling catalyst for market capitalization gains.

Just now, Musk revealed himself: Tesla and SpaceX may merge! A $3.5-trillion ‘century merger’ is coming.

Meanwhile, ‘Terafab’ represents trillion-dollar-scale ultra-manufacturing capability. Tesla’s production-line efficiency, combined with SpaceX’s aerospace-grade materials and processes, will birth the most formidable hardware manufacturing machine on Earth. Finally, there’s Starlink’s seamless, end-to-end connectivity. Future Tesla vehicles and robots will no longer rely on traditional telecom base stations. Overhead, more than 6,000 Starlink satellites form their dedicated backbone network. From any corner of the planet, data remains perpetually online—never lost, never disconnected. So long as no merger occurs, Tesla’s computing power cannot be freely allocated to SpaceX, nor can SpaceX’s Starlink be installed in Tesla products at no cost. Regulatory scrutiny of related-party transactions would drive management to the brink of madness. It’s time to tear down this wall! The accounting reckoning—A $3.5-trillion博弈 (game of strategy) Next comes the thorny question: How exactly would they merge? Tesla is a mega-public company with millions of retail investors and a $1.4-trillion market cap. SpaceX, too, is a publicly hyped company—valued as high as nearly $3 trillion. The central suspense: Who absorbs whom? Many speculate Tesla will likely absorb SpaceX via a new share issuance. But who determines the share-swap ratio? If Tesla issues too many new shares, existing retail investors face severe dilution—their holdings shrink in value overnight. If too few shares are issued, SpaceX’s early investors and key executives will absolutely refuse. On this pivotal issue, Musk has been ‘sealed off.’ He explicitly stated on the earnings call: due to conflicts of interest, he cannot participate in the committee’s deliberations. At SpaceX, Musk is an absolute autocrat—holding over 80% of voting rights, commanding unilateral authority. At Tesla, though he remains its spiritual leader, he is merely a major shareholder; ultimate decision-making power rests with institutional investors and retail shareholders. His heart is torn: both hands hold flesh. Musk cannot set the price for himself. Thus, each company formed its own ‘Special Committee’ composed solely of independent directors. More subtly: if the two merge, Musk—leveraging his super-voting rights at SpaceX—would likely regain majority control in the combined entity. Foreign media bluntly state: beyond operational synergies, gaining greater control is itself one of the core attractions of this deal for Musk. Over the coming months, top-tier financial advisors, lawyers, and investment bankers will lock horns in conference rooms. Tesla’s retail investors—beware! This is a life-or-death battle fought in cold, hard cash. Delaware’s gaze: The 50% make-or-break threshold ‘I think it’s a good idea—but it’s certainly not inevitable.’ Musk left himself an escape hatch during the call. Because he knows the legal and regulatory headwinds facing this deal dwarf even those of launching Starship into orbit. The toughest hurdle? Shareholder voting. This is a century-defining acquisition that alters the fundamental nature of both companies. By regulation, final approval requires formal shareholder consent—and the bar is exceptionally high: Tesla must secure support from approximately 50% of all issued and outstanding shares. That means even widespread retail investor abstention gets counted—de facto—as a ‘no’ vote. This is a mountain. Wall Street short-sellers, activist investors, and legal teams have already sharpened their knives.

Morning Bid: Musk Mulls Megacap Merger

Oct 21, 2026

Global markets fluctuated as Brent crude surged above $110 amid geopolitical tensions, while tech stocks rallied on SpaceX earnings and potential merger rumors involving Tesla.

reuters

Morning Bid: Musk Mulls Megacap Merger

FAQ