Elon Musk’s $5 trillion monster: Tesla and SpaceX exploring the biggest merger in history

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, the chief executive officer of both companies, said on SpaceX’s earnings webcast. “There’s a lot to be gained from cooperating on developing superintelligence software.”

Musk said he isn’t participating in the committee discussions because he is a conflicted party, and that the committees have yet to agree on terms.

A blockbuster deal would unite Tesla’s electric vehicle, energy and robotics businesses with SpaceX’s rocket launch and satellite internet operations. Underpinning it all are the companies’ shared ambitions in artificial intelligence — or what some in the industry are now calling superintelligence — fuelling investments in areas such as data centres and driverless cars.

SpaceX shares rose 4.6 per cent in post-market trading after reporting robust quarterly results, while Tesla climbed 1.2 per cent.

The scope of a potential merger is staggering, with both SpaceX and Tesla among the largest companies in the world and holding dominant positions in their respective industries. SpaceX, formally known as Space Exploration Technologies Corp, has a market value of about $US2 trillion, while Tesla is worth nearly $US1.5 trillion.

SpaceX and Tesla already have numerous business ties, overlapping investor bases and even some shared personnel. The rocket maker has purchased more than $US100 million worth of Tesla Cybertrucks, while xAI is a major customer of Tesla’s utility-scale batteries.

A combination has been widely expected since SpaceX rode a wave of investor enthusiasm to a record initial public offering this year, giving the company both currency and an implicit green light from shareholders to make a play for Tesla, making Musk the world’s first trillionaire. Bloomberg News reported in January that SpaceX had weighed a Tesla merger before ultimately deciding to acquire xAI, Musk’s artificial intelligence startup.

Musk cautioned that a merger isn’t certain and would require shareholder support. He said Tesla would need approval from 50 per cent of all shareholders, rather than simply a majority of those voting.

“I think it would be a good idea, but it’s really up to the special committees of both companies,” Musk said.

“Some people out there assume that a SpaceX and Tesla merger is a certainty. I think that would be overstating it.”

SpaceX earlier posted its first profit as a public company and Musk said it was tracking an annual revenue run rate of up to $US1 trillion.

SpaceX’s revenue climbed 161 per cent to $US14.58 billion for the three months ended September 30 from a year earlier. AI revenue surged by almost 10 times to $US7.56 billion, mostly from renting out data-centre capacity to developers such as 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 portion of prepared remarks with a seemingly off-script remark: “In a nutshell, what this implies for SpaceX annual recurring revenue by the end of ’27 is somewhere between $US500 billion and a trillion.”

The third quarter offered the clearest evidence yet that SpaceX’s heavy investment in AI is translating into revenue, even as spending on compute infrastructure remains enormous — capital expenses nearly tripled.

Bloomberg, Reuters

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